Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 67447 

and repetitive inspection intervals specified 

herein may be multiplied by the 1.2 

adjustment factor based on continued mixed 

operation at lower cabin pressure 

differentials. 

New Requirements of This AD 

Additional Inspection of Skins With 

Alodine-Coated Rivets 

(k) For airplanes identified in Figure 9 of 

the Accomplishment Instructions of Boeing 

Alert Service Bulletin 747–53A2321, 

Revision 7, dated October 27, 2005, as 

requiring additional inspection: Within 150 

flight cycles after the effective date of this 

AD, do the inspection in paragraph (k)(1) or 

(k)(2) of this AD in accordance with the 

Accomplishment Instructions of the service 

bulletin. 

(1) Do an external detailed inspection for 

cracking of Area 1, and repeat the inspection 

thereafter at intervals not to exceed 150 flight 

cycles until one of the actions in paragraph 

(k)(1)(i), (k)(1)(ii), or (k)(1)(iii) is 

accomplished. Repeat the inspection of Area 

1 thereafter in accordance with the 

requirements of paragraph (f) of this AD. 

(i) The inspection in accordance with 

paragraph (k)(1) of this AD has been done 

seven times. If this option is used: Within 

150 flight cycles after the seventh inspection, 

do the inspection required by paragraph 

(k)(2) of this AD. 

(ii) The inspection in accordance with 

paragraph (k)(2) has been accomplished. 

(iii) The inspections in accordance with 

paragraph (f) of this AD has been 

accomplished once in accordance with 

Revision 7 of the service bulletin. 

(2) Do an external HFEC inspection for 

cracking of Area 1 in accordance with the 

Accomplishment Instructions of Boeing Alert 

Service Bulletin 747–53A2321, Revision 7, 

dated October 27, 2005. Repeat the 

inspection of Area 1 thereafter in accordance 

with the requirements of paragraph (f) of this 

AD. 

Repair 

(l) If any crack is found during any 

inspection required by this AD: Before 

further flight, repair in accordance with the 

Accomplishment Instructions of Boeing Alert 

Service Bulletin 747–53A2321, dated October 

31, 1989; or Revision 7, dated October 27, 

2005. After the effective date of this AD, only 

Revision 7 of the service bulletin may be 

used. Where Revision 7 of the service 

bulletin specifies to contact Boeing for repair 

instructions: Before further flight, repair 

using a method approved in accordance with 

the procedures specified in paragraph (n) of 

this AD. 

Adjustments to Compliance Time: Cabin 

Differential Pressure 

(m) For the purposes of calculating the 

compliance threshold and repetitive interval 

for actions required by paragraphs (f), (g), and 

(k) of this AD, on or after the effective date 

of this AD: All flight cycles, including the 

number of flight cycles in which cabin 

differential pressure is at 2.0 psi or less, must 

be counted when determining the number of 

flight cycles that have occurred on the 

airplane, and a 1.2 adjustment factor may not 

be used. However, for airplanes on which the 

repetitive interval for the actions required by 

paragraphs (f) and (k) of this AD have been 

calculated in accordance with paragraph (i) 

or (j) of this AD by excluding the number of 

flight cycles in which cabin differential 

pressure is at 2.0 pounds psi or less, or by 

using a 1.2 adjustment factor: Continue to 

adjust the repetitive interval in accordance 

with paragraph (i) or (j) of this AD until the 

next inspections required by paragraph (f) or 

(k) of this AD are accomplished. Thereafter, 

no adjustment to compliance times based on 

paragraph (i) or (j) of this AD is allowed. 

Alternative Methods of Compliance 

(AMOCs) 

(n)(1) The Manager, Seattle Aircraft 

Certification Office (ACO), FAA, has the 

authority to approve AMOCs for this AD, if 

requested in accordance with the procedures 

found in 14 CFR 39.19. 

(2) Before using any AMOC approved in 

accordance with § 39.19 on any airplane to 

which the AMOC applies, notify the 

appropriate principal inspector in the FAA 

Flight Standards Certificate Holding District 

Office. 

(3) An AMOC that provides an acceptable 

level of safety may be used for any repair 

required by this AD, if it is approved by an 

Authorized Representative for the Boeing 

Commercial Airplanes Delegation Option 

Authorization Organization who has been 

authorized by the Manager, Seattle ACO, to 

make those findings. For a repair method to 

be approved, the repair must meet the 

certification basis of the airplane. 

(4) AMOCs approved previously in 

accordance with AD 90–26–10 are acceptable 

for compliance with the requirements of this 

AD, provided that any alternative terminating 

action was not based upon inspection results 

using sliding probe low-frequency eddy 

current (LFEC), sliding probe HFEC, or midfrequency eddy current (MFEC) inspection 

method; and provided that any alternative 

method future inspections did not 

incorporate sliding probe LFEC or MFEC 

inspection method. 

Material Incorporated by Reference 

(o) You must use Boeing Alert Service 

Bulletin 747–53A2321, dated October 31, 

1989; and Boeing Alert Service Bulletin 747–

53A2321, Revision 7, dated October 27, 2005; 

as applicable; to perform the actions that are 

required by this AD, unless the AD specifies 

otherwise. (Only the first page of Boeing 

Alert Service Bulletin 747–53A2321, dated 

October 31, 1989, contains the document 

issue date; no other page of this document 

contains this information.) The Director of 

the Federal Register approved the 

incorporation by reference of these 

documents in accordance with 5 U.S.C. 

552(a) and 1 CFR part 51. Contact Boeing 

Commercial Airplanes, P.O. Box 3707, 

Seattle, Washington 98124–2207, for a copy 

of this service information. You may review 

copies at the Docket Management Facility, 

U.S. Department of Transportation, 400 

Seventh Street SW., Room PL–401, Nassif 

Building, Washington, DC; on the Internet at 

http://dms.dot.gov; or at the National 

Archives and Records Administration 

(NARA). For information on the availability 

of this material at the NARA, call (202) 741–

6030, or go to 

http://www.archives.gov/federal_register/ 

code_of_federal_regulations/ 

ibr_locations.html. 

Issued in Renton, Washington, on 

November 8, 2006. 

Kalene C. Yanamura, 

Acting Manager, Transport Airplane 

Directorate, Aircraft Certification Service. 

[FR Doc. E6–19534 Filed 11–21–06; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

15 CFR Part 902 

50 CFR Part 622 

[Docket No. 060731206–6280–02; I.D. 

072806A] 

RIN 0648–AS67 

Fisheries of the Caribbean, Gulf of 

Mexico, and South Atlantic; Reef Fish 

Fishery of the Gulf of Mexico; 

Amendment 26 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Final rule. 

SUMMARY: NMFS issues this final rule to 

implement Amendment 26 to the 

Fishery Management Plan for the Reef 

Fish Fishery of the Gulf of Mexico 

(FMP). Amendment 26 establishes an 

individual fishing quota (IFQ) program 

for the commercial red snapper sector of 

the reef fish fishery in the Gulf of 

Mexico. Initial participants in the IFQ 

program will receive percentage shares 

of the commercial quota of red snapper 

based on specified historical landings 

criteria. The percentage shares of the 

commercial quota will equate to annual 

IFQ allocations. Both shares and IFQ 

allocations will be transferable. In 

addition, NMFS informs the public of 

the approval by the Office of 

Management and Budget (OMB) of the 

collection-of-information requirements 

contained in this final rule and 

publishes the OMB control numbers for 

those collections. The intended effect of 

this rule is to manage the commercial 

red snapper sector of the reef fish 

fishery to preserve its long-term 

economic viability and to achieve 

optimum yield from the fishery. 

DATES: This rule is effective January 1, 

2007, except: Amendments to 

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67448 Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 

§ 622.4(p)(4) § 622.7(gg), and (hh) are 

effective November 22, 2006. The 

existing stay of § 622.16 is lifted, 

effective November 22, 2006. The 

revision of § 622.16(b) is effective 

November 22, 2006. The new stay of 

§ 622.16, except paragraph (b), is 

effective November 22, 2006, until 

January 1, 2007. 

ADDRESSES: Copies of the Final 

Supplemental Environmental Impact 

Statement (FSEIS), the Final Regulatory 

Flexibility Analysis (FRFA), and the 

Record of Decision (ROD) may be 

obtained from Phil Steele, NMFS, 

Southeast Regional Office, 263 13th 

Avenue South, St. Petersburg, FL 33701; 

telephone 727–824–5305; fax 727–824–

5308; e-mail Phil.Steele@noaa.gov. 

Comments regarding the burden-hour 

estimates or other aspects of the 

collection-of-information requirements 

contained in this final rule may be 

submitted in writing to Jason Rueter at 

the Southeast Regional Office address 

(above) and to David Rostker, Office of 

Management and Budget (OMB), by email at DavidlRostker@omb.eop.gov, or 

by fax to 202–395–7285. 

FOR FURTHER INFORMATION CONTACT: Phil 

Steele, telephone 727–824–5305; fax 

727–824–5308; e-mail 

Phil.Steele@noaa.gov. 

SUPPLEMENTARY INFORMATION: The reef 

fish fishery of the Gulf of Mexico is 

managed under the FMP. The FMP was 

prepared by the Gulf of Mexico Fishery 

Management Council (Council) and is 

implemented through regulations at 50 

CFR part 622 under the authority of the 

Magnuson-Stevens Fishery 

Conservation and Management Act 

(Magnuson-Stevens Act). 

On August 2, 2006, NMFS published 

a notice of availability of Amendment 

26 and requested public comments (71 

FR 43706). On August 24, 2006, NMFS 

published the proposed rule to 

implement Amendment 26 and 

requested public comments (71 FR 

50012). NMFS approved Amendment 26 

on October 26, 2006. The rationale for 

the measures in Amendment 26 is 

provided in the amendment and in the 

preamble to the proposed rule and is not 

repeated here. 

Comments and Responses 

NMFS received a total of 1,890 

comments on the proposed IFQ 

program, including 1,473 comments in 

favor of the program, urging NMFS to 

implement the IFQ program by January 

1, 2007. The remaining comment letters 

opposed the IFQ program for reasons 

summarized below. Similar comments 

are consolidated, and each is followed 

by NMFS’ response. 

Comment 1: Numerous individuals 

expressed concern about enforcement of 

the IFQ program and how it will prevent 

further illegal harvest of red snapper. 

Additional concerns included an 

alleged illegal fishery able to meet or 

exceed the commercial red snapper 

quota, inadequate law enforcement 

presence in the Gulf to curb this illegal 

harvest, IFQ shares given to commercial 

fishermen with past fishery violations, 

and inadequate penalties for fishery 

violations that do not inhibit potential 

violators from participating in illegal 

activities. In addition, some commenters 

recommended the Secretary of 

Commerce delay implementation of the 

IFQ program until the enforcement 

aspects of this program are reviewed by 

a Gulf of Mexico law enforcement 

taskforce. 

Response: The IFQ program was 

designed with full input by Federal and 

state law enforcement officers. The red 

snapper IFQ program will be intensely 

monitored, incorporating a vessel 

monitoring system (VMS) and predeparture notification requirement 

implemented via Amendment 18A to 

the FMP, a requirement for advance 

notification of landing information, a 

dockside monitoring component, and 

real-time data management to account 

for all red snapper landed, including a 

checks-and-balances system matching 

quota allocations with fish purchased. 

Law enforcement officers will be able to 

correlate where fish have been caught, 

where they were physically landed, and 

to whom the catch (or portion of the 

catch) was sold. For individuals found 

in violation of the IFQ program, fines, 

loss of IFQ shares, and sanctions to their 

commercial reef fish permit could be 

imposed. 

Comment 2: Twelve comments were 

received questioning requirements of 

the IFQ program, including predeparture notification, advance 

notification of landing information, 

restricted offloading times, security of 

personal identification numbers (PINs) 

for landing verification, and the cost 

recovery program. 

Response: The enforcement related 

requirements mentioned above are 

essential to the success of the IFQ 

program. Enforcement of regulations 

must exist to deter individuals from 

violating the law. The pre-departure 

notification requirement is associated 

with the VMS requirement implemented 

via Amendment 18A to the FMP, not 

Amendment 26. Advance notification of 

landing information is required and is 

essential for monitoring IFQ landings 

and ensuring the integrity of the IFQ 

program. The IFQ program requires 

allocation holders landing red snapper 

and dealers receiving red snapper to 

enter data for landings/sale transactions. 

The IFQ share/allocation holder would 

validate the transaction online by 

entering his unique PIN number at the 

point of transaction submittal to ensure 

validity in landings data, such as total 

weight and ex-vessel value of landings. 

The PIN number is protected so the PIN 

number is not revealed. The Magnuson 

Stevens Act requires NMFS to establish 

a fee to assist in recovering the actual 

costs directly related to the management 

and enforcement of any IFQ program. 

Cost recovery fees would be paid by the 

IFQ share/allocation holder landing red 

snapper. NMFS expects these costs 

should be more than offset by increased 

profits realized under the IFQ program. 

Comment 3: One commenter 

indicated Amendment 26 disregarded 

requirements of the Magnuson-Stevens 

Act. The commenter was concerned the 

IFQ plan accounted for only past 

participation and not present 

participation, specifically stating that 

the landings data from the years 2005 

and 2006 were not used to initially 

calculate IFQ shares. The commenter 

was also concerned the IFQ plan did not 

account for dependence on the fishery. 

Response: Throughout the 

development of the IFQ program, the 

issues of initial eligibility for and initial 

allocation of IFQ shares have featured 

prominently in Council deliberations. 

Both past and present participation 

played an important role in designing 

the IFQ program. To take into account 

present participation in the fishery, only 

those who own Class 1 or Class 2 

licenses at the time this final rule is 

published in the Federal Register would 

be eligible for initial distribution of IFQ 

shares. However, past participation, as 

evidenced through historical landings 

associated with a reef fish permit, 

determines the amount of IFQ shares 

allocated to each eligible participant. 

Historical landings are deemed to reflect 

each participant’s dependence on the 

fishery. 

The qualifying landings are those 

made during the period 1990–2004 for 

Class 1 licenses or 1998–2004 for Class 

1 historical captain and Class 2 licenses. 

The years 1990 and 1998 reflect the 

beginning years for which landings 

could be assigned to appropriate 

licenses. The Council and NMFS 

recognize that some long-time 

participants who no longer own Class 1 

or Class 2 licenses, as well as some 

current owners of Class 2 licenses, may 

not receive initial IFQ shares. However, 

after receiving input from the public, 

the Council chose 2004 as the ending 

year for allocation purposes to deter 

speculation in the fishery while the 

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Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 67449 

details of the IFQ program were being 

developed. 

Comment 4: Some commenters 

requested Limited Access Privilege 

Programs (LAPPs) be developed for 

other fisheries such as the for-hire sector 

or the multi-species reef fish fishery. 

Others supported a commercial buy-out 

program of red snapper fishermen by 

the recreational sector. 

Response: The amendment did not 

consider the topics listed in the above 

comment. Therefore, this comment is 

beyond the scope of the rule. However, 

the Council is currently considering 

implementing a more comprehensive 

LAPP in the Gulf of Mexico reef fish 

fishery. 

Comment 5: One organization 

indicated 17 lapsed Class 2 licenses 

should not be included in the initial 

allocation to avoid possible challenges 

from other fishermen with lapsed or 

otherwise disputed licenses. The 

number of active permits used in the 

amendment is inaccurate. 

Response: NMFS records and 

monitors the number of permits and 

licenses in the Gulf of Mexico 

commercial red snapper fishery. At the 

time of final rule publication, owners of 

Class 1 or Class 2 licenses will be 

eligible for initial distribution of IFQ 

shares, with their shares determined by 

their average landings during select 

years for the qualifying period of 1990–

2004 for Class 1 licenses or 1998–2004 

for Class 1 historical captain and Class 

2 licenses. These determinations are 

based on landings history and whether 

all Class 1 and Class 2 licenses have 

been validly issued. When the 

amendment was being developed, the 

current number of permits was 

accurately assessed and provided at that 

time. 

Comment 6: Several commenters were 

opposed to the VMS requirement 

because a tracking device is a violation 

of privacy and vessel owners should not 

be required to have VMS units installed 

on their vessel. One commenter 

suggested fishermen who have three 

convictions or more involving excessive 

trip limits, closed area harvest, or illegal 

sales be required to install VMS on their 

vessel. The commenter also suggested 

VMS units be installed on randomly 

selected vessels with the cost of VMS to 

be paid for by NMFS. 

Response: The final rule does not 

include the VMS requirement for 

vessels with a commercial Gulf reef fish 

vessel permit as proposed in 

Amendment 26. Amendment 26 stated 

the VMS requirement would be 

unnecessary if Reef Fish Amendment 

18A and the associated VMS 

requirement were approved by NMFS. 

NMFS has implemented the final rule 

for Amendment 18A (71 FR 45428, 

August 9, 2006), requiring VMS units be 

installed on all vessels with a 

commercial or for-hire reef fish permit. 

Therefore, there is no need to 

implement any additional VMS 

requirements with Amendment 26. 

Comment 7: Several commenters 

indicated the IFQ program marginalizes 

the recreational sector and the 

allocation of total allowable catch (TAC) 

should be shifted more in favor of the 

recreational fishery. 

Response: Amendment 26 does not 

reallocate TAC between the commercial 

and recreational fisheries. The 

commercial quota managed by the IFQ 

program would be distributed based on 

the same allocation methodology used 

for previous years (i.e. 51 percent 

commercial/49 percent recreational). 

The primary purpose of the IFQ 

program is to reduce overcapacity in the 

commercial red snapper fishery and to 

eliminate, to the extent possible, the 

problems associated with derby fishing, 

in order to assist the Council in 

achieving optimum yield from the 

fishery. Reallocating the TAC would 

need to be addressed in a separate 

amendment. 

Comment 8: One commenter disputed 

the sentence on page 38 of Amendment 

26, which stated, ‘‘The rapid growth and 

overcapitalization of the red snapper 

fishery have intensified the race for 

fish.’’ Another commenter stated the 

commercial red snapper fishery is not 

overcapitalized. 

Response: The issue of 

overcapitalization in the commercial red 

snapper fishery has been analyzed in 

the amendment and has been 

extensively discussed during the 

development of the IFQ program. The 

harvest capability of the red snapper 

commercial fishery is larger than 

needed to harvest the commercial quota 

in an economically efficient manner, i.e. 

the fishery is overcapitalized. This 

overcapacity is evidenced by derby-type 

conditions. For example, the 

commercial fishery landed its 3.06 

million-lb (1.39 million-kg) annual 

quota in 71.5 days, on average, from 

1992 through 1995, and their 4.65 

million-lb (2.11 million-kg) annual 

quota in 77.2, on average, from 1996 

through 2003. The current commercial 

red snapper management regime 

continues to constrain the ability to 

effectively achieve the goals and 

objectives specified in the FMP and in 

the Magnuson-Stevens Act’s ten 

national standards. 

Comment 9: Several commenters 

stated the IFQ program is unfair to crew 

members and processors, eliminates 

jobs, harms coastal economies, and does 

not protect the historical integrity of 

coastal fishing towns. One commenter 

indicated there was no public comment 

period on the social impacts of the IFQ 

program, nor was there enough data to 

properly assess the effects of the 

program on the ancillary components of 

the commercial red snapper fishery. 

Response: Amendment 26 analyzes 

the potential effects of the IFQ program 

on crew members, processors, and 

coastal fishing communities where they 

are located. With the potential for 

consolidation of existing permits and 

the reduction in overcapacity, crew 

members may become unemployed with 

trickle-down effects on fishing 

communities. This is a collateral 

consequence that may not be avoided in 

the process of promoting efficiency in 

the fishery. Those employed in the 

fishery, however, can expect a more 

stable employment opportunity under a 

more efficient fishery. The IFQ program 

may also change the dynamics of 

negotiations in the fishery. With more 

flexibility in their fishing practices, 

fishermen may be able to extract some 

of the profits previously enjoyed by 

dealers/processors. However, the exvessel demand is a derived demand 

from consumers. Hence, the ability of 

fishermen to negotiate a better pricing 

schedule will still be constrained by 

factors faced by dealers/processors in 

the wholesale/retail market. 

Discussions of the social impacts are 

more qualitative than quantitative due 

to data limitations, as recognized in the 

amendment. However, the 

socioeconomic information presented in 

the amendment reflects the best 

available data. Overall, the IFQ program 

is expected to produce net social and 

economic benefits. Public comments 

have been sought for all aspects of this 

program, including the social impact 

analysis, at various public hearings, 

Council meetings, and during the public 

comment period for the Draft 

Environmental Impact Statement (DEIS), 

the amendment, and proposed rule. 

Comment 10: Several commenters 

responded negatively to the IFQ 

program because it creates new-found 

wealth among quota recipients by 

privatizing a public resource, unequally 

distributes that wealth among 

participants, and prohibits new entrants 

into the fishery because of prohibitively 

high share costs. Other commenters 

suggested initial IFQ shares should be 

distributed equally among Class 1 and 

Class 2 red snapper license holders 

instead of being issued based on 

landings data. These commenters also 

suggested the Class 1 votes from the 

referendum were weighted unfairly. 

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67450 Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 

Response: Assigning harvest 

privileges to a public resource is a 

controversial issue discussed in the 

amendment. This issue, however, is not 

unique to the IFQ program as it also 

characterizes the current license 

limitation system. NMFS agrees with 

the Council in contending that, in 

addition to effectively addressing 

overcapitalization and derby conditions 

in the fishery, the IFQ program can 

foster stewardship of the resource better 

than the current system due to the 

assurance IFQ shareholders have on the 

amount of fish they have the 

opportunity to harvest. Further, the 

Magnuson-Stevens Act makes it clear 

that IFQ programs do not create, nor can 

they be construed to create, any right, 

title, or interest in or to any fish before 

the fish are harvested. The current 

license limitation system encourages 

participants to harvest fish as fast as 

they can before the quota is reached and 

the fishery is closed. While an IFQ 

program may cause some fishermen to 

feel disenfranchised, an IFQ program 

will have an overall net benefit to the 

nation as it helps to achieve optimum 

yield in the red snapper fishery, as 

required by the Magnuson-Stevens Act. 

Several alternatives were considered 

regarding the initial distribution of IFQ 

shares among eligible participants, 

including equal distribution among 

eligible Class 1 and Class 2 license 

holders. The Magnuson-Stevens Act 

requires consideration of historical 

participation in distributing IFQ shares 

among eligible participants. NMFS 

agrees with the Council that allocation 

of IFQ shares in proportion to landings 

is more fair and equitable than an equal 

distribution of IFQ shares, since 

landings indicate dependence on and 

commitment to the fishery. The two red 

snapper referenda are not part of this 

final rule, although they were required 

before the IFQ program could proceed. 

The weighting of the votes, as specified 

by the Magnuson-Stevens Act, was 

based on the proportional harvest under 

each permit and endorsement between 

January 1, 1993, and September 1, 1996. 

Comment 11: One commenter 

suggested the development of the IFQ 

program should not have followed 

Department of Justice Guidelines 

relative to market entry. The commenter 

was also concerned about price fixing 

by large fish houses that control many 

of the Class 1 licenses and catch a large 

portion of the quota. Additionally, the 

commenter was concerned that the 8–

percent ownership cap is too excessive 

and would allow an entity to acquire 

excessive shares in the fishery. Finally, 

the commenter stated the 0.0001 percent 

minimum share limitation is too low. 

Response: Reference to the 

Department of Justice’s Horizontal 

Merger Guidelines in the proposed rule 

was made in recognition that some may 

consider the choice of an ownership cap 

to be too low. The Guidelines merely 

describe the analytical process the 

Department of Justice will employ in 

determining whether to challenge a 

horizontal merger. The Council 

considered several alternatives 

regarding ownership caps, ranging from 

no cap to a cap of as low as 2 percent. 

With input from members of the public, 

particularly the industry advisory panel, 

the Council chose an ownership cap 

equal to the highest allocation an IFQ 

holder possesses at the time of initial 

allocation of IFQ shares. If an ownership 

cap is too high, market power may 

become too consolidated and produce 

an unduly anti competitive market. 

However, setting the limit too low could 

also have adverse effects on the 

economic efficiency of the industry. 

This can happen in cases where it is less 

costly overall for fewer entities to each 

catch more fish than it is for many 

entities to each catch smaller amounts 

of fish. Aside from considerations of 

controlling the undue consolidation of 

market power and maintaining a fair 

level of competition, Section 303(b)(6) 

of the Magnuson-Stevens Act requires 

consideration of several factors in 

establishing a limited access program 

such as the red snapper IFQ program. 

Those factors include, but are not 

limited to: present participation in the 

fishery; historical fishing practices in, 

and dependence on, the fishery; the 

economics of the fishery; and the 

cultural and social framework relevant 

to the fishery and any affected fishing 

communities. Although the 

approximately 8–percent cap may not 

result in consolidation rising to the level 

of presenting an undue concentration of 

market power or less competition, a 

higher cap could result in levels of 

consolidation producing effects that are 

problematic under the MagnusonStevens Act. Examples would include 

potentially eliminating numerous smallscale historical participants, adversely 

affecting the social and cultural 

framework of the fishery by adversely 

affecting working conditions and wages 

for crew, and potentially adversely 

affecting prices. NMFS solicited 

comments on appropriateness and 

magnitude of the proposed ownership 

cap in the proposed rule. The only 

comment received suggested the 8–

percent cap was too high. 

Current information indicates exvessel demand for red snapper is elastic, 

indicating the absence of market power 

(and resulting price fixing) despite the 

presence of some entities owning as 

many as six Class 1 licenses. Being a 

derived demand, ex-vessel demand is 

partly determined by the demand at the 

wholesale and retail markets. Factors 

affecting the wholesale and retail 

markets, in addition to the presence of 

many substitutes in the ex-vessel 

market, make it very difficult for a 

dealer or group of dealers to acquire 

enough market power to influence the 

ex-vessel price for red snapper. This is 

especially true with the presence of an 

ownership cap of about 8 percent. 

Currently, there are 17 fleet operations, 

i.e., entities owning more than one Class 

1 license, accounting for as much as 40 

percent of total commercial harvest of 

red snapper. It is fairly reasonable to 

expect these 17 operations to continue 

their business under the IFQ program. 

Even if these 17 operations increase 

their control of red snapper harvest, it 

is still very unlikely for any one of them 

to exercise strong market power to affect 

price fixing. 

The Council provided neither a 

minimum allocation nor minimum 

landing requirement for initial 

eligibility. The 0.0001 percent minimum 

initial IFQ share distribution is mainly 

intended to ensure the lowest allocation 

would be at least a practical minimum 

amount. 

Comment 12: Several commenters 

suggested the IFQ program limits quota 

shareholders right to a fair market value 

because they are limited to only selling 

their shares to other reef fish fishermen, 

at least for the first 5 years of the 

program. 

Response: Several alternatives were 

evaluated concerning who should be 

eligible to receive transfers of IFQ 

shares/allocations. These alternatives 

ranged from allowing everyone to 

receive transfers to only allowing IFQ 

share/allocation holders to receive 

transfers. The preferred alternative, 

allowing transfers to any valid 

commercial reef fish permit holder 

during the first 5 years and, thereafter, 

any U.S. citizen or permanent resident 

alien, is believed to be most equitable 

because it initially favors commercial 

reef fish fishermen who have invested 

time and resources into the fishery, but 

ultimately recognizes red snapper as a 

public resource. 

Comment 13: One commenter stated 

not enough of the cost to implement the 

IFQ program would be obtained through 

the cost recovery program, resulting in 

a taxpayer burden, and suggested the 

commercial fishermen cover the entire 

cost of the IFQ program. Another 

commenter indicated initial IFQ shares 

should be allocated through an auction 

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Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 67451 

with the proceeds from the auction used 

to start the IFQ program. 

Response: Section 304(d)(2) of the 

Magnuson-Stevens Act requires the 

Secretary of Commerce establish a fee to 

assist in recovering the actual costs 

directly related to the management and 

enforcement of any IFQ program. 

Section 304(d)(2) states that the fee shall 

not exceed 3 percent of the ex-vessel 

value of fish harvested under the IFQ 

program. 

Deciding who should initially be 

eligible to receive IFQ shares, and how 

those shares should be allocated are two 

of the most controversial aspects of 

designing and implementing an IFQ 

program. Ideally, IFQ shares should be 

widely distributed to avoid granting 

excessive windfall profits to a few 

fishery participants. Broader initial 

allocations distribute benefits more 

equitably and compensate more 

individuals as IFQ shares are 

consolidated through transfers. 

However, eligibility criteria also should 

consider time and capital invested in 

developing the fishery as required by 

§ 303(b)(6) of the Magnuson-Stevens 

Act. Class 1 license holders who own or 

operate most of the high volume vessels 

in the commercial red snapper fishery 

would likely conclude this alternative 

as unfair because they ventured the 

capital to create the fishery harvesting 

capacity. 

Comment 14: Without a mandatory 

sunset policy, NMFS is violating the 

public trust. The IFQ program should be 

offered for a limited duration so there is 

no confusion as to public ownership of 

the resource, and the public resource 

should not be leased for the benefit of 

the individual. A review of the IFQ 

program every 5 years is inadequate. 

Response: Existing United States IFQ 

programs define IFQs as ‘‘revocable 

privileges’’ not permanent franchises. 

All limited entry systems, by definition, 

restrict the number of participants in the 

fishery. IFQ programs are a form of 

limited entry. As such, they are 

sometimes perceived (both by 

participants in fisheries and other 

members of the public) as an attempt to 

privatize a public resource and are at 

odds with the idea the public has an 

inalienable right to free access of public 

resources. The Magnuson-Stevens Act 

states that an IFQ is a permit that may 

be revoked or limited at any time in 

accordance with the Act. Giving the 

privilege to catch red snapper, while 

reducing overcapitalization and 

eliminating the effects of a derby 

fishery, will foster stewardship of the 

resource among IFQ shareholders who 

could be assured the opportunity to 

catch their allocation. The current 

license limitation system does not foster 

such a stewardship incentive, but rather 

encourages participants to compete to 

harvest the available quota before it is 

reached and the fishery closed. 

A sunset provision (i.e. limiting the 

duration of the proposed IFQ program to 

either 5 or 10 years as discussed in the 

amendment) would adversely affect the 

marketability of IFQ shares, and, 

thereby, minimize or negate the 

effectiveness of the IFQ program in 

reducing excess fishing capacity and 

providing associated physical, 

biological, ecological, social, and 

economic benefits. Consideration was 

given to reducing the time for a review 

of the IFQ program but ultimately a 

conclusion was reached that 5 years is 

a more reasonable time for evaluating 

the effects of the IFQ program. 

Comment 15: The IFQ program would 

completely deplete red snapper in the 

Gulf of Mexico. The IFQ program would 

create incentives to discard less 

economically valuable fish. Species 

other than red snapper caught as 

bycatch in the red snapper fishery will 

be caught more frequently because the 

IFQ program will allow fishing year 

round and there no longer is a closed 

season for red snapper. 

Response: The primary purpose of the 

IFQ program is to reduce overcapacity 

in the commercial red snapper fishery 

and to eliminate, to the extent possible 

the problems associated with derby 

fishing, in order to achieve optimum 

yield from the fishery. The IFQ program 

may increase fishermen’s incentive to 

discard low value fish in favor of high 

value fish. However, the overall 

environmental benefits of the IFQ 

program to the red snapper stock, its 

habitat and other non-target species are 

expected to outweigh the adverse effects 

of any high grading activity. 

Additionally, NMFS is currently 

evaluating alternatives to reduce or 

eliminate bycatch in a Draft 

Environmental Impact Statement to 

Evaluate Alternatives to Set Gulf of 

Mexico Red Snapper Total Allowable 

Catch and Reduce Bycatch in the Gulf 

of Mexico Directed and Shrimp Trawl 

Fisheries (Red Snapper DEIS). The 

notice of availability for the Red 

Snapper DEIS published on October 13, 

2006 (71 FR 60509). 

Comment 16: Several commenters 

believe the data collection for the 

commercial and recreational fishery 

needs to improve for the IFQ program to 

work successfully. 

Response: Data collection for the 

commercial fishery would improve 

under the IFQ program. Landings data 

will be entered into an online 

accounting system immediately when 

fish are offloaded. This would provide 

real time accounting of commercial 

landings. Since the IFQ program is 

implemented for the commercial 

fishery, data collection for the 

recreational fishery is a separate issue 

and would be addressed in a separate 

amendment. 

Comment 17: Several individuals 

were concerned the IFQ program is 

inconsistent with ecosystem-based 

management and suggested the IFQ 

program should be opposed in favor of 

more fair and sustainable alternatives. 

Response: The Council and NMFS 

evaluated a range of alternative IFQ 

program elements. NMFS believes the 

IFQ program described by the preferred 

alternatives in the amendment would be 

the best means to accomplish the stated 

objective, which is to reduce 

overcapacity in the red snapper fishery, 

while achieving the best socioeconomic 

outcome for current red snapper 

commercial fishermen and the best 

biological outcome for red snapper and 

other affected species. 

Comment 18: One commenter 

suggested red snapper TAC and 

regulations remain status quo for at least 

2 years and a precise economic study be 

conducted on the hurricane impacts on 

the stock as well as the communities, 

industries, and business directly or 

indirectly depending on the fishery. 

Response: Amendment 26 did not 

consider the effects of adjusting red 

snapper TAC as a method of preventing 

overfishing. This is discussed in the Red 

Snapper DEIS. Amendment 26 only 

discussed how IFQ shares and 

allocations would be adjusted if 

commercial quota is changed. The 

Council and NMFS periodically review 

and adjust TAC in response to new data 

and information, which generally take 

the form of new or updated red snapper 

stock assessments. The IFQ program 

specifies how resulting adjustments 

(reductions or increases) to the 

commercial quota would be distributed 

among IFQ shareholders. Adjustments 

in the commercial quota would be 

allocated proportionately among 

recognized IFQ shareholders (e.g., those 

on record at the time of the adjustment) 

based on the percentage of the 

commercial quota each holds at the time 

of the adjustment. Initial shares for 2007 

will be based on 51 percent of 5 million 

lb (2.3 million kg), which is 2.55 million 

lb (1.16 million kg) of the initial quota, 

or 51 percent of whatever TAC has been 

selected as the Preferred Alternative by 

NMFS or the Council. Any quota share 

balance resulting from a decision to 

specify a larger TAC would be 

distributed after the date of publication 

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of the final rule setting the new TAC, 

but no later than July 1, 2007. 

Comment 19: One commenter 

suggested an IFQ program would not 

meet the goals of Amendment 26 

because the IFQ program will shorten 

the season as the quota is filled faster, 

will not reduce overcapacity, will not 

increase safety at sea, and will not 

decrease bycatch because Class 2 license 

holders who will lose their license 

under the initial eligibility criteria of the 

IFQ program, will no longer be able to 

land red snapper previously caught as 

bycatch when fishing for other species. 

Response: These issues are analyzed 

in the amendment and have been 

thoroughly discussed in the 

development of the IFQ program. Unlike 

the current system of closed and open 

seasons, the IFQ program will allow the 

fishery to be open all year long and, 

thus, allow fishermen to properly 

schedule their fishing activities. 

Fishermen, therefore, would not be 

forced to fish during inclement weather 

or at times when there are vessel safety 

concerns just to take advantage of the 

short open season. The IFQ program 

could result in consolidation of fishing 

operations to take advantage of cost 

savings, thus reducing fishing capacity. 

Under the IFQ program, both Class 1 

and Class 2 license holders would be 

identified as IFQ shareholders. All 

owners of Class 1 licenses are expected 

to receive IFQ share allocations. Of the 

628 Class 2 licenses, 146 are expected 

not to receive any allocation because 

they did not have any red snapper 

landings during the qualifying period of 

1998–2004. Regarding bycatch of red 

snapper by a non-IFQ shareholder, an 

owner of a vessel with a commercial 

vessel permit for Gulf reef fish could 

obtain, at no cost, a Gulf red snapper 

IFQ vessel endorsement and purchase 

allocation from an IFQ shareholder to 

accommodate landing of red snapper 

bycatch. Bringing all commercial red 

snapper landings under the IFQ 

program allows better tracking of IFQ 

landings and commercial quotas. 

Comment 20: Commercial fishermen 

have publicly testified they would not 

change their fishing methods with the 

IFQ program, but Amendment 26 

indicates one of the benefits to the 

program would be fewer hooks in the 

water. 

Response: The purpose of the IFQ 

program proposed in the amendment is 

to reduce overcapacity in the 

commercial fishery and to end derby 

fishing. The harvest privileges provided 

by such a program are intended to 

eliminate the incentive to over invest in 

the fishery and race to fish, and to give 

fishermen a long-term interest in the 

health and productivity of the fishery 

and, thus, an incentive to conserve it for 

the future. In some cases, the increased 

flexibility afforded IFQ program 

participants has improved fishing and 

handling methods, thereby increasing 

product quality and reducing bycatch 

discard mortality. Extending the 

duration of the fishing season should 

increase catch efficiency. Subsequent 

changes in fishing practices would be 

expected with a fishery that is now open 

year-round instead of the first 10 days 

of each month. Over time the IFQ 

program is expected to attract those 

fishermen who have the most vested 

interests in the fishery and are the most 

efficient fishermen. Increased efficiency 

would lead to increased catch per unit 

effort and therefore, less hooks in the 

water to catch the same amount of fish. 

Comment 21: The share allocation 

provisions in the proposed rule are 

flawed since the provisions do not 

consider the allocation of the initial 

share to small- and entry-level 

fishermen who are not yet participating 

in the fishery as required by the 

Magnuson Stevens Act. Also, the 

proposed rule does not make provisions 

for reserving funds for assistance to new 

entrants. 

Response: The primary purpose of the 

IFQ program is to reduce overcapacity 

in the commercial red snapper fishery 

and to eliminate, to the extent possible 

the problems associated with derby 

fishing, in order to achieve optimum 

yield from the fishery. After the initial 

allocation, there would be a cost to enter 

the program, as new entrants must 

purchase shares. Therefore, those 

interested in entering the fishery who 

cannot afford to buy shares will be 

excluded from the program. One of the 

principal reasons for developing the 

proposed IFQ program is the fishery is 

overcapitalized, that is, the collective 

harvest capacity of fishery vessels and 

participants is in excess of that required 

to harvest the TAC. To remedy this 

problem, by definition the harvest 

capacity must be reduced. Therefore, 

loss of employment for some current 

participants, and negative effects on 

small communities, are unavoidable 

adverse effects of the proposed action. 

However, the overall net social and 

economic benefits of an IFQ program are 

expected to be better for the Nation as 

the program helps the red snapper 

fishery achieve optimum yield as 

required by the Magnuson-Stevens Act. 

The Council and NMFS did consider, 

during development of Amendment 26, 

the option of using funds from the cost 

recovery plan to aid these individuals in 

purchasing IFQ shares/allocations but 

elected not to do so at this time. 

However, this option may be 

reconsidered, at the Council’s 

discretion, as the program evolves. 

Comment 22: One commenter 

indicated provisions requiring IFQ 

holders use the harvest privileges or 

forfeit them back to the government (i.e. 

a use it or lose it provision) are unfair. 

Another commenter indicated this 

provision was fair. 

Response: Although a use it or lose it 

provision was considered in the 

amendment, it was not proposed. The 

IFQ program, as implemented, would 

not include a use it or lose it provision. 

Changes from the Proposed Rule 

In § 622.4(a)(2)(ix), language was 

added to clarify that the IFQ program 

requirements do not preclude the 

existing ability of a person aboard a 

vessel with a commercial vessel permit 

for Gulf reef fish, nor the ability of a 

person aboard a vessel with an IFQ 

vessel endorsement, to fish for red 

snapper under the bag limit provisions. 

Those existing bag limit provisions 

include prohibition of the possession of 

the bag limit when commercial 

quantities of Gulf reef fish are possessed 

on board a vessel and a prohibition on 

sale or purchase of any Gulf reef fish 

caught under the bag limit provision. 

In § 622.16(c)(3)(i), the advance notice 

of landing provision, the requirement to 

report the address of the dealer where 

IFQ red snapper are to be received has 

been removed. In some cases, fish are 

landed at sites other than the dealer’s 

location, and the specific dealer address 

may not be known at the time of initial 

offloading. This revision would 

accommodate that circumstance without 

jeopardizing enforceability of the 

program. Also, in this paragraph, the 

time frame for the advance notice of 

landing has been revised from ’’...at 

least 3 hours in advance of landing...’’

to ’’...at least 3 hours, but no more than 

12 hours, in advance of landing...’’. This 

more specific time frame will provide 

fishers a reasonable time period to 

report and will provide a better-defined 

and more practical time period for 

enforcement purposes. Finally, in this 

same paragraph, language has been 

added to clarify that failure of a vessel 

owner or operator to comply with the 

advance notice of landing requirement, 

will preclude authorization to complete 

the required landing transaction report 

and will preclude issuance of the 

transaction approval code that is 

required to legally possess IFQ red 

snapper. 

Under NOAA Administrative Order 

205–11, dated December 17, 1990, the 

Under Secretary for Oceans and 

Administration has delegated authority 

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Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 67453 

to sign material for publication in the 

Federal Register to the Assistant 

Administrator for Fisheries, NOAA. 

Classification 

The Administrator, Southeast Region, 

NMFS, determined that Amendment 26 

is necessary for the conservation and 

management of the Gulf red snapper 

fishery and is consistent with the 

Magnuson-Stevens Act and other 

applicable laws. 

This final rule has been determined to 

be significant for purposes of Executive 

Order 12866. 

NMFS prepared a final supplemental 

environmental impact statement (FSEIS) 

for this amendment; a notice of 

availability was published on August 2, 

2006 (71 FR 43706). 

NMFS prepared an FRFA, as required 

by section 604 of the Regulatory 

Flexibility Act. The FRFA incorporates 

the initial regulatory flexibility analysis 

(IRFA), a summary of significant issues 

raised by public comments, NMFS 

responses to those comments, and a 

summary of the analyses completed to 

support the action. A copy of the full 

analysis is available from the NMFS (see 

ADDRESSES). A summary of the analysis 

follows. 

Twelve comments were received on 

issues involving pre-departure and postlanding notifications, restricted 

offloading times, cost recovery program, 

and security of personal identification 

numbers (PINs) for landing verification. 

Except for cost recovery, all these issues 

relate to enforcement and monitoring of 

catches. These requirements are 

necessitated to effectively track and 

validate landings on a real-time basis 

and to enhance the likelihood of a 

successful IFQ program. The cost 

recovery program is a MagnusonStevens Act requirement mainly 

designed to shift the cost of the IFQ 

program to those who would directly 

benefit from the program. The fee is 

currently set at the maximum allowable 

level, 3 percent of ex-vessel value, but 

may be adjusted downward if the fee 

exceeds the actual costs directly related 

to the management and enforcement of 

the program. NMFS is strongly 

committed to providing security for 

PINs and will ensure such information 

is handled in compliance with existing 

requirements relevant to confidential 

information. 

One commenter questioned whether 

the IFQ program considered past and 

present participation, dependence on 

the fishery, and potential for excessive 

share ownership. The commenter was 

also concerned that 2005 and 2006 

landings were not used in calculating 

initial IFQ shares. The amendment 

contains substantial discussions of these 

issues, in addition to the fact that the 

Council received many comments from 

the public on each of these issues. 

NMFS agrees with the Council that 

restricting eligibility for initial IFQ 

distribution and consideration of 

landings history for calculating IFQ 

shares reflect past and present 

participation in the fishery as well as 

dependence on the fishery. NMFS also 

agrees with the Council in disallowing 

2005 and 2006 landings to deter 

speculation in the fishery while the 

details of IFQ program were being 

developed. 

One organization commented that the 

number of active permits used in the 

amendment is inaccurate and that 17 

lapsed Class 2 licenses should not be 

included in the initial allocation. NMFS 

records and monitors Class 1 and Class 

2 licenses in the commercial red 

snapper fishery on a daily basis. The 

number used in the amendment 

accounts for all existing Class 1 and 

Class 2 licenses, regardless of whether 

they are active or inactive, expired or 

not. The current regulations allow 

renewal of a Class 1 or Class 2 license 

any time after it expires. The 

amendment only provides that whoever 

owns a Class 1 or Class 2 license at the 

time the final rule is published is 

eligible for initial IFQ allocation, with 

actual shares determined by landings 

during the qualifying period of 1990–

2004 for Class 1 licenses not issued 

based on historical captain status, and 

1998–2004 for Class 1 licenses issued 

based on historical captain status and 

for Class 2 licenses. 

One commenter noted the commercial 

red snapper fishery is not at 

overcapacity while another one 

disputed the statement in the 

Amendment that the rapid growth and 

overcapitalization of the red snapper 

fishery have intensified the race for fish. 

Since the 1990’s, the harvest capability 

of the commercial red snapper fishery 

has far exceeded the level to harvest the 

quota in an economically efficient way. 

This has resulted in a derby-like fishery, 

with the usual negative results such as 

seasonally depressed ex-vessel prices 

due to market gluts and fishing during 

unfavorable weather conditions, among 

others. Management responded to these 

conditions by imposing more restrictive 

regulatory measures to alleviate the 

derby effects. 

One commenter stated that the IFQ 

program is unfair to crew members and 

processors, eliminates jobs, harms 

coastal economies, and does not protect 

the historical integrity of coastal fishing 

towns. The amendment notes that the 

expected consolidation of operations 

which reduce overcapacity would result 

in some crew members being displaced 

and this would create trickle-down 

effects on fishing communities. This is 

an unavoidable consequence of 

promoting efficiency in the fishery but 

could also result in more stable 

employment for some crew members. 

The IFQ program may also change the 

dynamics of negotiating in favor of 

harvesters, but the extent of such change 

is still constrained by factors faced by 

dealers/processors in the wholesale and 

retail market. 

Several commenters suggested 

distributing IFQ shares equally among 

Class 1 and Class 2 license holders. 

Others commented that the program 

unequally distributes wealth among 

participants and that the program 

prohibits new entrants into the fishery 

due to prohibitive share costs. The 

Council considered several alternatives 

on initial distribution of IFQ shares, 

including equal allocation among Class 

1 and Class 2 licenses. NMFS agrees 

with the Council’s decision to allocate 

IFQ shares in proportion to landings, 

although this may result in unequal 

initial distribution of wealth. The reason 

for this is that proportional allocation is 

more fair and equitable than equal 

distribution, because proportional 

landings are more reflective of historical 

participation in, dependence on, and 

commitment to the fishery. Entry into 

the fishery is actually expected to be 

less costly under the IFQ program than 

under the current system, since IFQs 

can be purchased in lower 

denominations whereas licenses can 

only be bought as whole licenses. New 

entrants can especially benefit from this, 

because they can first experiment on a 

limited basis and evaluate their 

performance before committing more 

resources into the fishery. 

One commenter suggested, in effect, 

that the ownership cap is too high and 

raised concern about price fixing by 

large fish houses owning many Class 1 

licenses. The Council considered 

ownership cap alternatives ranging from 

2 percent to no cap. The Council’s 

choice of an ownership cap equal to the 

highest allocation an IFQ holder 

receives at the time of initial allocation 

(about 8 percent) was based on inputs 

from members of the public, including 

the industry advisory panel. The 

Council deemed this level not to result 

in market power concentration while at 

the same time it would not penalize the 

current largest operation. In the absence 

of market power, price fixing is not 

likely to happen. In addition, at least the 

current 17 fleet operations are expected 

to remain in the fishery under the IFQ 

programs and, thus, would provide 

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67454 Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 

enough competition to make price fixing 

very unlikely. 

Several commenters suggested the 

requirement, during the first 5 years of 

the program, to sell IFQ shares only to 

a person who has a commercial vessel 

permit for Gulf reef fish limits 

shareholders’ right to a fair market 

value. The Council and NMFS recognize 

this potential side effect. However, the 

Council and NMFS approved this 

alternative to ensure, initially, IFQ 

shares are owned by persons who have 

a demonstrated dependence on the 

commercial reef fish fishery. 

One commenter stated the IFQ 

program will shorten the season, will 

not reduce overcapacity, and will not 

increase safety at sea. The same 

commenter also said the program will 

not reduce bycatch especially for Class 

2 license holders ineligible for initial 

IFQ distribution who will no longer be 

able land red snapper as bycatch. The 

amendment discusses at length that 

under the IFQ program, the fishery will 

be open year round. This affords more 

flexibility among fishermen to schedule 

their harvest to take advantage of stock, 

market, weather, and other conditions, 

including vessel safety. Consolidation of 

operations is an expected result as 

operations scale down to take advantage 

of cost efficiencies in production, thus 

reducing overcapacity. With less effort 

in the fishery, bycatch is expected to 

decrease. Class 2 licenses which will 

not receive allocations are those that 

reported no landings as bycatch or 

otherwise. 

These and other comments have not 

resulted in changing the proposed rule, 

so the economic analysis conducted for 

the proposed rule has also not changed. 

The following completes the FRFA 

summary. 

The Magnuson-Stevens Act provides 

the statutory basis for the final rule. The 

final rule will establish an IFQ program 

for the commercial red snapper fishery 

in the Gulf. Specifics for this IFQ 

program include the following: (1) no 

limit on the duration of the program, but 

a program evaluation is required every 

5 years; (2) maximum IFQ share 

ownership equal to the maximum 

percentage issued to an initial recipient 

of IFQ shares; (3) restriction on initial 

eligibility only to owners of Class 1 or 

Class 2 license holders; (4) 

proportionate allocation of initial IFQ 

shares based on average annual landings 

for 10 consecutive years during 1990–

2004 for Class 1, seven consecutive 

years during 1998–2004 for Class 1 

historical captains, and five years 

during 1998–2004 for Class 2; (5) 

establishment of an appeals process and 

a set-aside of 3 percent of the 

commercial quota to resolve appeals; (6) 

restriction on transfers of IFQ shares/ 

allocations only to those with a valid 

commercial reef fish permit during the 

first 5 years and, thereafter, to any U.S. 

citizen or permanent resident alien; (7) 

proportionate allocation of commercial 

quota adjustments based on percentage 

holdings at the time of the adjustment 

and phased-in issuance of IFQ 

allocations for the 2007 season; and, (8) 

provision for IFQ cost recovery fees to 

be paid by IFQ holders but collected by 

registered IFQ dealers/processors. The 

main objectives of the final rule are to 

address the excess capacity and derby 

problems in the commercial red snapper 

fishery. 

The final rule would generally impact 

two types of businesses in the Gulf reef 

fish fishery, namely, commercial fishing 

vessels (including recreational for-hire 

vessels with commercial reef fish 

permits) and fish dealers. At present, 

the Gulf of Mexico (GOM) commercial 

reef fish permits are under a license 

limitation program, and licenses are 

renewable every year. Also, the 

commercial red snapper fishery is 

presently under a two-tier license 

limitation program. A Class 1 license 

entitles the holder a trip limit of 2,000 

lb (907 kg) of red snapper while a Class 

2 license affords a lower trip limit of 

200 lb (91 kg). Each type of license is 

allowed only one trip per day. The IFQ 

program would replace this two-tier 

license limitation system in the 

commercial red snapper fishery, but the 

limited access program for commercial 

reef fish permits remains. 

There are 1,118 active commercial 

reef fish permits and 91 others that are 

currently expired but may be renewed 

within a year. Thus, a total of 1,209 

vessels may be considered to comprise 

the universe of commercial harvest 

operations in the GOM reef fish fishery. 

Of the 1,209 commercial permittees, 136 

entities hold Class 1 licenses and 628 

entities hold Class 2 licenses. Of the 136 

Class 1 licenses, seven have been issued 

on the basis of the historical captain 

criterion. All original owners of Class 1 

historical captain licenses have sold 

their licenses. Reported average annual 

gross receipts (in 2004 dollars) of 

commercial reef fish vessels in the GOM 

range from $24,095 for low-volume 

vertical line vessels to $116,989 for 

high-volume longline vessels. The 

corresponding annual net incomes range 

from $4,479 for low-volume vertical line 

vessels to $28,466 for high-volume 

vertical line vessels. Permit records 

indicate there are 17 Class 1 fleet 

operations owning 58 licenses. In 2004, 

the top three fleet operations landed a 

total of 987,532 lb (447,937 kg) of red 

snapper, or an average of 329,177 lb 

(149,312 kg) per fleet operation. At the 

2004 average red snapper ex-vessel 

price of $2.83 per pound, the average 

pounds landed convert to ex-vessel 

revenues of $931,571. No fleet 

information is available for Class 2 

licenses, but it is fairly safe to assume 

that if ever a Class 2 fleet operation 

exists, it would generate much less 

revenues than its Class 1 counterparts. 

There currently exists a permitting 

requirement for dealers to buy or sell 

reef fish, including red snapper, caught 

in the GOM. This permitting 

requirement remains under the IFQ 

program, but in addition, a red snapper 

endorsement would be required for 

dealers to buy or sell red snapper. Based 

on the permits file, there are 227 dealers 

possessing permits to buy and sell reef 

fish species. However, based on logbook 

records, there are 154 reef fish dealers 

actively buying and selling red snapper. 

It is possible that some of the 227 

dealers may be handling red snapper in 

one year but not in another. Dealers in 

Florida purchased about $1.8 million 

worth of red snapper, followed by 

dealers in Louisiana with purchases of 

$1.4 million, and dealers in Texas with 

purchases of $1.3 million. Dealers in 

Mississippi purchased $174 thousand 

worth of red snapper, and those in 

Alabama, $88 thousand. These dealers 

may hold multiple types of permits and, 

because we do not know 100 percent of 

the business revenues, it is not possible 

to determine what percentage of their 

business comes from buying and selling 

red snapper. 

Average employment information per 

reef fish dealer in the GOM is unknown. 

Although dealers and processors are not 

synonymous entities, employment for 

reef fish processors in the Southeast 

totals approximately 700 individuals, 

both part- and full-time. It is assumed 

all processors must be dealers, yet a 

dealer need not be a processor. Further, 

processing is a much more labor 

intensive operation than dealing. 

Therefore, given the employment 

estimate for the processing sector, it is 

likely the average dealer employment 

would be lower. 

The Small Business Administration 

(SBA) defines a small business as one 

that is independently owned and 

operated, is not dominant in its field of 

operation, and has annual receipts not 

in excess of $4.0 million in the case of 

commercial harvesting entities or $6.5 

million in the case of for-hire entities. 

In the case of fish processors and fish 

dealers, rather than a receipts threshold, 

the SBA specifies employee thresholds 

of 500 and 100 employees, respectively. 

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Based on the gross revenue and 

employment profiles presented above, 

all permitted commercial reef fish 

vessels (including fleet operations) and 

reef fish dealers affected by the final 

regulations may be classified as small 

entities. 

The final rule introduces additional 

reporting and record-keeping 

requirements mainly through the 

tracking of IFQ shares and the 

corresponding red snapper landings and 

ex-vessel values.An electronic reporting 

system is the approach to track IFQ 

shares and corresponding red snapper 

landings. The reporting burden would 

mainly fall on the dealers. An IFQ 

dealer endorsement would be required 

of any dealer purchasing red snapper. 

The IFQ dealer endorsement would be 

issued at no cost to those individuals 

who possess a valid GOM reef fish 

dealer permit and request the 

endorsement. Although the current 

GOM reef fish dealer permit must be 

renewed annually at a cost of $100 for 

the initial permit ($25 for each 

additional permit), the IFQ dealer 

endorsement would remain valid as 

long as the individual possesses a valid 

GOM reef fish dealer permit and abides 

by all reporting and cost recovery 

requirements of the IFQ program. As an 

integral part of the electronic 

monitoring system, an IFQ dealer would 

be required to have access to a computer 

and the Internet for inputting, among 

other data, pounds and value of red 

snapper purchased by the dealer from 

an IFQ shareholder. If a dealer does not 

have current access to computers and 

the Internet, he or she may have to 

expend approximately $1,500 for 

computer equipment and accessories 

(one-time cost) and $300 annual cost for 

Internet access. Dealers would need 

some basic computer and Internet skills 

to input information for all red snapper 

purchases into the IFQ electronic 

reporting system. Dealers also have to 

remit to NMFS on a quarterly basis, the 

cost recovery fees equivalent to 3 

percent of the ex-vessel value of red 

snapper purchased from IFQ 

shareholders. Although IFQ 

shareholders pay this fee, it is the 

responsibility of dealers to collect and 

remit these fees to NMFS. In addition to 

this quarterly remittance, dealers would 

be required to submit to NMFS a yearend report summarizing all transactions 

involving the purchase of red snapper. 

There is currently no available 

information to determine how many of 

the 227 reef fish dealers or of the current 

154 red snapper dealers have the 

necessary electronic capability to 

participate in the IFQ program. 

However, demonstration of this 

capability would be necessary for IFQ 

program participation by any dealer. 

IFQ shareholders also have to use the 

electronic reporting system to report 

transfer/assignment of shares and 

allocation as well as to monitor their 

outstanding IFQ allocations. Similar 

skills and equipment needs for dealers 

also apply to IFQ shareholders. There 

are 95 IFQ holders based on Class 1 

license qualification and as many as 482 

IFQ holders based on Class 2 license 

qualification. Over time under the IFQ 

program, the number of IFQ 

shareholders is expected to decline. 

As required by the Sustainable 

Fisheries Act of 1996, two referenda 

involving qualified commercial red 

snapper fishery participants have been 

conducted. Results from both referenda 

indicate strong support for an IFQ 

program in the commercial red snapper 

fishery. No other federal rules have been 

uncovered that would duplicate, 

overlap or conflict with the final rule. 

The 764 vessels that have Class 1 or 

Class 2 licenses comprise 64 percent of 

all vessels with GOM commercial reef 

fish permits. Also, at least 154, or 68 

percent, of the 227 permitted reef fish 

dealers would be affected. It is clear 

then the final rule would affect a 

substantial number of small entities. 

Since all affected vessel and dealer 

operations are small entities, the final 

rule would not result in disproportional 

impacts where small entities are placed 

at a significant competitive 

disadvantage to large entities. Some 

vessel operations are relatively larger 

than others. In particular, 17 fleet 

operations account for as much as 40 

percent of the entire commercial quota 

for red snapper. These 17 fleet 

operations and another 78 single vessel 

operations would initially receive about 

90 percent of IFQ shares. The other 482 

smaller operations would receive the 

rest of the IFQ shares. Finally, 146 Class 

2 vessel operations would likely not 

receive any initial IFQ shares, because 

they have no landings history during the 

qualifying period of 1998–2004 for these 

licenses. 

The final rule has varying effects on 

the profitability of the affected vessel 

operations. Most likely, it has minimal 

effects on the profits of the 146 Class 2 

vessel operations that have no red 

snapper landings. These vessels would 

mainly lose their relatively low-cost 

entry into the red snapper fishery 

should the need arise. Under the final 

rule, assuming they already have a Gulf 

reef fish permit, they have to buy 

shares/allocations even if they intend to 

fish only on a limited basis. Some of the 

482 Class 2 vessel operations that may 

have increasingly relied on red snapper 

to supplement their overall harvests 

may receive small IFQ shares. They may 

either have to buy more shares/ 

allocations to continue fishing for red 

snapper or sell their shares. Either way, 

their overall profits may decline, at least 

initially, although in selling their IFQ 

shares they would receive some 

remuneration. The 136 Class 1 vessel 

operations and some Class 2 vessel 

operations that have relatively large red 

snapper landings are expected to benefit 

most from the IFQ program. An IFQ 

system is expected to improve the 

profitability of these vessels. This 

improvement would generally take time, 

since fishermen would have to adjust 

their operations to achieve the most 

profitable position. Such adjustment 

may involve consolidation of multiple 

vessel operations to lower costs, 

scheduling of harvests to take advantage 

of market and weather conditions, 

negotiation with purchasers to strike a 

long-term deal at relatively stable prices, 

or some other arrangements that take 

advantage of a relatively certain share of 

a season’s quota at the start of the 

season. Some entities may be successful 

in making adjustments while others may 

not. For those that cannot, there is 

always the option to sell their shares. 

They may leave the red snapper fishery, 

but would receive some remuneration 

for doing so. 

Imposition of a cost recovery fee 

would also affect vessel profits. The fee, 

which is currently set at its allowable 

maximum of 3 percent of ex-vessel 

revenues, could potentially result in a 

bigger percentage reduction in profits, 

particularly for smaller operations. 

Larger operations, such as most Class 1 

vessels, can absorb this fee because their 

profits are expected to increase under 

the IFQ program. 

The extent to which the IFQ 

monitoring system, including the 

collection and remittance of the cost 

recovery fees, would affect dealers’

profitability cannot be quantified at this 

time. However, the relatively 

established dealers, the monetary cost 

requirement under an electronic 

monitoring system is probably small, 

especially if they already have computer 

systems in place. Smaller operations, 

however, may totally stay out of the red 

snapper fishery. 

This amendment considered several 

alternatives to the final rule. An 

alternative to the IFQ program is the 

current license limitation system. Under 

this system, overcapacity and derby 

effects have substantially constrained 

the profitability of the commercial 

harvest industry. The IFQ program is 

expected to effectively address these 

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67456 Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 

major issues/problems in the fishery. 

There are two other alternatives with 

respect to the duration of the IFQ 

program. One specifies no duration 

while the other imposes a term limit on 

the program. The former has similar 

effects as the final rule, but it does not 

contain a mandatory evaluation of the 

program every 5 years. A sunset 

provision, as in the latter alternative, 

offers a lower likelihood for the IFQ 

program to achieve its intended 

objectives. Also, it would introduce 

uncertainties into the program due to 

potential changes in the ‘‘rules of the 

game.’’

With respect to an ownership cap, 

two other alternatives were considered. 

One places no cap on ownership of IFQ 

shares while the other places a cap 

ranging from 2 to 15 percent of the 

commercial quota. The first alternative 

provides a fertile ground for 

consolidation of IFQ shares, but it could 

also lead to concentration of ownership 

to a select few at the expense of 

eliminating historically small-scale 

operations in the fishery. The second 

alternative may be too liberal (e.g., 15 

percent) as to lead to over-consolidation 

or too restrictive (e.g., 2 percent) as to 

penalize the more efficient operations. It 

is worth noting that, as per advice of the 

Office of Management and Budget, 

public comment was especially sought 

on the issue of ownership cap as the 

proposed rule may be too limiting. The 

only public comment received on this 

issue suggested the ownership cap in 

the proposed rule is too high. The 

response to this comment discussed the 

rationale for not changing the final rule. 

Two other alternatives were 

considered on the issue of initially 

eligible persons. The first one does not 

specify persons eligible to receive initial 

IFQ shares, and thus does not provide 

guidance for initially allocating IFQ 

shares. The second restricts initial 

eligibility to Class 1 license holders. 

This is too restrictive as to disallow at 

least 482 Class 2 license holders from 

continued participation in the fishery at 

the start of the IFQ program. 

As to the issue of allocating initial 

IFQ shares, two other alternatives were 

considered. The first does not specify a 

methodology for allocating initial IFQ 

shares, and thus does not provide 

guidance for allocating IFQ shares to 

eligible participants. The second 

allocates initial IFQ shares equally 

among all eligible participants. This 

alternative would penalize the 

highliners and reward the small-scale 

operations in the fishery. There are 

more participants who would benefit 

from this alternative, but the magnitude 

of adverse impacts on at least 136 

operations would be relatively large. 

Regarding the appeals process, three 

other alternatives were considered. The 

first does not establish an appeals 

process, and thus would not provide 

fishermen an avenue to contest landings 

information used by NMFS to determine 

their IFQ shares. The second establishes 

an appeals board composed of state 

directors/designees who would advise 

the RA on appeals. The third establishes 

an advisory panel composed of IFQ 

shareholders. The final rule is simple 

and more straightforward than any of 

the alternatives that establish an appeals 

board, and it also does not pose 

problems relative to confidentiality of 

individual landings information. 

There are five other alternatives 

regarding the transfer of IFQ shares/ 

allocations. The first provides no limit 

on transfer; the second limits transfers 

only to those with valid commercial reef 

fish permits; the third limits transfers 

only to IFQ shareholders; the fourth 

allows transfers to U.S. citizens and 

permanent resident aliens; and, the fifth 

limits transfers only to IFQ shareholders 

during the first 5 years of the IFQ 

program and those with valid 

commercial reef fish permits thereafter. 

With the exception of the first 

alternative, all others would tend to 

limit the price an IFQ seller gets, so the 

resulting IFQ prices would not capture 

the true value of the resource. In 

addition, such limitations would 

constrain the entry of potentially more 

efficient producers. The final rule 

would be less restrictive than these 

alternatives but still would be more 

restrictive than the first alternative that 

does not impose limits on transfer. 

However, the final rule addresses 

concerns relative to the preservation of 

the historical and current participation 

in the fishery. 

Two other alternatives were 

considered on the issue of minimum 

landings. Both alternatives impose a 

minimum landings requirement to 

retain IFQ shares, and thus would 

reduce the flexibility of IFQ 

shareholders to adjust their operations, 

particularly in the downward direction, 

from year to year for business or other 

reasons. 

On the issue of allocating adjustments 

in the commercial quota, three other 

alternatives were considered. The first 

does not specify a method for allocating 

adjustments, so it does not provide 

adequate guidance for allocating quota 

changes. The second would allocate 

quota changes equally among IFQ share 

holders, and the third would allocate 

quota changes equally for 50 percent of 

the change and proportionately for the 

other 50 percent. The second alternative 

would provide smaller operations larger 

benefits with quota increases and also 

larger losses with quota decreases. The 

third alternative would favor smaller 

operations at the expense of larger 

operations. Both large and small vessel 

operations were considered small 

entities for SBA purposes. 

The final rule regarding a cost 

recovery fee is intended to abide by the 

Section 304(d)(2) provision of the 

Magnuson-Stevens Act. One other 

alternative considered in this respect is 

not to impose a fee, which would not be 

in compliance with the noted provision. 

Another alternative considered is 

similar to the final rule, except that 

collection and submission of fees reside 

on the IFQ shareholders and not on the 

dealers. Under this alternative and the 

final rule, a small entity bears the cost 

of collecting and remitting the fees. The 

final rule, however, affords a better 

accounting control for the government. 

Section 212 of the Small Business 

Regulatory Enforcement Fairness Act of 

1996 states that, for each rule or group 

of related rules for which an agency is 

required to prepare a FRFA, the agency 

shall publish one or more guides to 

assist small entities in complying with 

the final rule, and shall designate such 

publications as ‘‘small entity 

compliance guides.’’ As part of the 

rulemaking process, NMFS prepared a 

fishery bulletin, which also serves as a 

small entity compliance guide. The 

fishery bulletin will be sent to all 

commercial Gulf reef fish vessel permit 

holders and all dealers with Gulf reef 

fish dealer permits. 

This final rule contains collection-ofinformation requirements subject to the 

Paperwork Reduction Act (PRA) and 

which have been approved by the Office 

of Management and Budget (OMB) 

under control number 0648–0551. The 

collection-of-information requirements 

and estimated average public reporting 

burdens, in minutes, are as follows: (1) 

Dealer account activation--5; (2) Dealer 

transaction report--7; (3) Shareholder 

account activation--5; (4) Allocation 

holder account activation--10; (5) 

Advance notification of landing--3; (6) 

Transfer of share--15; and (7) Transfer of 

allocation--5. These estimates of the 

average public reporting burdens 

include the time for reviewing 

instructions, searching existing data 

sources, gathering and maintaining the 

data needed, and completing and 

reviewing the collections of 

information. Send comments regarding 

the burden estimates or any other aspect 

of the collection-of-information 

requirements, including suggestions for 

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Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 67457 

reducing the burden, to NMFS and to 

OMB (see ADDRESSES). 

Notwithstanding any other provision 

of law, no person is required to respond 

to, nor shall a person be subject to a 

penalty for failure to comply with, a 

collection of information subject to the 

requirements of the PRA, unless that 

collection of information displays a 

currently valid OMB control number. 

The addition to the regulations at 50 

CFR 622.16(b) contains administrative 

procedures necessary for timely 

implementation of the red snapper IFQ 

program. These necessary advance 

procedures include and provide for: 

determination of initial eligibility for an 

IFQ; calculation of initial IFQ shares 

and allocations; notification to 

participants of the requirement for IFQ 

endorsements and of procedures for 

obtaining endorsements; shareholder 

notification regarding landings histories, 

initial determination of shares and 

allocations, and instructions for setting 

up an online IFQ account; notification 

to dealers regarding endorsement 

requirements, procedures for obtaining 

endorsements, and instructions for 

establishing an online IFQ dealer 

account; and the opportunity and ability 

of IFQ participants to review and 

respond to NMFS’ initial determinations 

regarding landings histories, shares, and 

allocations and to establish online IFQ 

accounts and obtain IFQ endorsements 

that are required as of the beginning of 

the fishing year, January 1, 2007. A 

delay in the effective date of these 

essential administrative procedures 

would impede IFQ participants’ ability 

to complete required actions prior to the 

beginning of the fishing year and deny 

IFQ participants the opportunity to 

participate in the fishery at the 

beginning of the fishing year. These 

procedures are primarily the 

responsibility of NMFS. 

Delay in the effectiveness of these 

essential administrative procedures 

would unnecessarily delay 

implementation of the IFQ program 

beyond the intended January 1, 2007, 

start date which is the beginning of the 

fishing year. These administrative 

procedures involve numerous actions by 

NMFS (e.g., initial determinations of 

eligibility, initial determinations of 

optimal landings histories, initial 

determinations of IFQ shares and 

allocations, and notification to 

participants via certified mail) that are 

prerequisites for subsequent response 

and action by participants (e.g., 

confirming or contesting NMFS’ initial 

determinations, establishing IFQ 

accounts, and obtaining required IFQ 

endorsements) all of which need to 

occur prior to the beginning of the 

fishing year. The addition of the 

prohibitions at 50 CFR 622.7(gg) and 

(hh) as of the date of publication of this 

final rule is necessary to ensure the 

integrity of information provided as part 

of the advance administrative 

procedures. The removal and reserving 

of 50 CFR 622.4(p)(4) as of the date of 

publication of this final rule is 

necessary to: prevent subsequent 

transfer of Class 1 and Class 2 licenses 

that determine IFQ eligibility, stabilize 

the universe of eligible IFQ participants, 

and allow NMFS to conduct the 

advance administrative procedures 

necessary to implement the IFQ 

program in a timely manner. Therefore, 

the need to implement these provisions 

in a timely manner constitutes good 

cause under 5 U.S.C. 553(d)(3) to waive 

the 30-day delay in effective date for 50 

CFR 622.16(b), 622.7(gg) and (hh), and 

622.4(p)(4). Finally, the requirement for 

prior notice and opportunity for public 

comment is waived with respect to the 

revisions to the table of OMB control 

numbers in 15 CFR 902.1(b) because 

this action is a rule of agency 

organization, procedure, or practice 

under 5 U.S.C. 553(b)(A). 

List of Subjects 

15 CFR Part 902 

Reporting and recordkeeping 

requirements. 

50 CFR Part 622 

Fisheries, Fishing, Puerto Rico, 

Reporting and recordkeeping 

requirements, Virgin Islands. 

Dated: November 17, 2006. 

Samuel D. Rauch III, 

Deputy Assistant Administrator for 

Regulatory Programs, National Marine 

Fisheries Service. 

■ For the reasons set out in the 

preamble, 15 CFR Chapter IX and 50 

CFR Chapter VI are amended as follows: 

15 CFR Chapter IX 

PART 902—NOAA INFORMATION 

COLLECTION REQUIREMENTS UNDER 

THE PAPERWORK REDUCTION ACT: 

OMB CONTROL NUMBERS 

■ 1. The authority citation for part 902 

continues to read as follows: 

Authority: 44 U.S.C. 3501 et seq. 

■ 2. In § 902.1, paragraph (b), under ‘‘50 

CFR’’, the entry ‘‘622.16’’ is added in 

numerical order to read as follows: 

§ 902.1 OMB control numbers assigned 

pursuant to the Paperwork Reduction Act. 

* * * * * 

(b) * * * 

CFR part or section where the 

information collection requirement is located 

Current OMB 

control number (All numbers begin 

with 0648–) 

*****

50 CFR 

*****

622.16 –0551 

*****

50 CFR Chapter VI 

PART 622—FISHERIES OF THE 

CARIBBEAN, GULF, AND SOUTH 

ATLANTIC 

■ 3. The authority citation for part 622 

continues to read as follows: 

Authority: 16 U.S.C. 1801 et seq. 

■ 4. In § 622.1, revise paragraph (a), the 

first sentence of paragraph (b), Table 1 

entry ‘‘FMP for the Reef Fish Resources 

of the Gulf of Mexico’’, and add footnote 

5 to read as follows: 

§ 622.1 Purpose and scope. 

(a) The purpose of this part is to 

implement the FMPs prepared under 

the Magnuson-Stevens Act by the 

CFMC, GMFMC, and/or SAFMC listed 

in Table 1 of this section. 

(b) This part governs conservation and 

management of species included in the 

FMPs in or from the Caribbean, Gulf, 

Mid-Atlantic, South Atlantic, or 

Atlantic EEZ, unless otherwise 

specified, as indicated in Table 1 of this 

section. * * * 

TABLE 1—FMPS IMPLEMENTED UNDER

PART 622 

FMP title 

Responsible 

fishery management 

council(s) 

Geographical 

area 

*****

FMP for the 

Reef Fish Resources of the 

Gulf of Mexico 

GMFMC Gulf.5

*****

5 Regulated area includes adjoining state 

waters for Gulf red snapper harvested or possessed by a person aboard a vessel with a 

Gulf red snapper IFQ vessel endorsement or 

possessed by a dealer with a Gulf red snapper IFQ dealer endorsement. 

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67458 Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 

■ 5. In § 622.2, definitions of ‘‘Actual 

ex-vessel value’’ and ‘‘IFQ’’ are added in 

alphabetical order to read as follows: 

§ 622.2 Definitions and acronyms. 

* * * * * 

Actual ex-vessel value means the total 

monetary sale amount a fisherman 

receives for IFQ landings from a 

registered IFQ dealer. 

* * * * * 

IFQ means individual fishing quota. 

* * * * * 

■ 6. Section 622.4 is amended by: 

■ A. Adding a new sentence after the 

first sentence of paragraph (a)(2)(v). 

■ B. Revising paragraphs (a)(2)(ix), 

(a)(4), the first sentence of paragraph (d), 

paragraph (g)(1), and the first sentence 

of paragraph (h)(1). 

■ C. Removing and reserving paragraph 

(p)(4). 

■ D. Removing and reserving paragraphs 

(p)(i) through (p)(3) and (p)(5) and 

(p)(6). 

The additions and revisions read as 

follows: 

§ 622.4 Permits and fees. 

(a) * * * 

(2) * * * 

(v) * * * See paragraph (a)(2)(ix) of 

this section regarding an additional IFQ 

vessel endorsement required to fish for, 

possess, or land Gulf red snapper. * * 

* 

* * * * * 

(ix) Gulf red snapper IFQ vessel 

endorsement. For a person aboard a 

vessel, for which a commercial vessel 

permit for Gulf reef fish has been issued, 

to fish for, possess, or land Gulf red 

snapper, regardless of where harvested 

or possessed, a Gulf red snapper IFQ 

vessel endorsement must have been 

issued to the vessel and must be on 

board. As a condition of the IFQ vessel 

endorsement issued under this 

paragraph (a)(2)(ix), a person aboard 

such vessel must comply with the 

requirements of § 622.16 regardless of 

where red snapper are harvested or 

possessed. An owner of a vessel with a 

commercial vessel permit for Gulf reef 

fish can download an IFQ vessel 

endorsement from the NMFS IFQ 

website at ifq.sero.nmfs.noaa.gov. If 

such owner does not have an IFQ online 

account, the owner must first contact 

IFQ Customer Service at 1–866–425–

7627 to obtain information necessary to 

access the IFQ website and establish an 

IFQ online account. There is no fee for 

obtaining this endorsement. The vessel 

endorsement remains valid as long as 

the vessel permit remains valid and the 

vessel owner is in compliance with all 

Gulf reef fish and Gulf red snapper IFQ 

reporting requirements, has paid all IFQ 

fees required under paragraph (c)(2) of 

this section, and is not subject to 

sanctions under 15 CFR part 904. The 

endorsement is not transferable. The 

provisions of this paragraph do not 

apply to fishing for or possession of Gulf 

red snapper under the bag limit 

specified in § 622.39(b)(1)(iii). See 

§ 622.16 regarding other provisions 

pertinent to the Gulf red snapper IFQ 

system. 

* * * * * 

(4) Dealer permits, endorsements, and 

conditions —(i) Permits. For a dealer to 

receive Gulf reef fish, golden crab 

harvested from the South Atlantic EEZ, 

South Atlantic snapper-grouper, rock 

shrimp harvested from the South 

Atlantic EEZ, dolphin or wahoo 

harvested from the Atlantic EEZ, or 

wreckfish, a dealer permit for Gulf reef 

fish, golden crab, South Atlantic 

snapper-grouper, rock shrimp, Atlantic 

dolphin and wahoo, or wreckfish, 

respectively, must be issued to the 

dealer. 

(ii) Gulf red snapper IFQ dealer 

endorsement. In addition to the 

requirement for a dealer permit for Gulf 

reef fish as specified in paragraph 

(a)(4)(i) of this section, for a dealer to 

receive Gulf red snapper subject to the 

Gulf red snapper IFQ program, as 

specified in § 622.16(a)(1), or for a 

person aboard a vessel with a Gulf red 

snapper IFQ vessel endorsement to sell 

such red snapper directly to an entity 

other than a dealer, such persons must 

also have a Gulf red snapper IFQ dealer 

endorsement. A dealer with a Gulf reef 

fish dealer permit can download a Gulf 

red snapper IFQ dealer endorsement 

from the NMFS IFQ website at 

ifq.sero.nmfs.noaa.gov. If such persons 

do not have an IFQ online account, they 

must first contact IFQ Customer Service 

at 1–866–425–7627 to obtain 

information necessary to access the IFQ 

website and establish an IFQ online 

account. There is no fee for obtaining 

this endorsement. The endorsement 

remains valid as long as the Gulf reef 

fish dealer permit remains valid and the 

dealer is in compliance with all Gulf 

reef fish and Gulf red snapper IFQ 

reporting requirements, has paid all IFQ 

fees required under paragraph (c)(2) of 

this section, and is not subject to 

sanctions under 15 CFR part 904. The 

endorsement is not transferable. See 

§ 622.16 regarding other provisions 

pertinent to the Gulf red snapper IFQ 

system. 

(iii) State license and facility 

requirements. To obtain a dealer permit 

or endorsement, the applicant must 

have a valid state wholesaler’s license in 

the state(s) where the dealer operates, if 

required by such state(s), and must have 

a physical facility at a fixed location in 

such state(s). 

* * * * * 

(d) * * * Unless specified otherwise, 

a fee is charged for each application for 

a permit, license, or endorsement 

submitted under this section, for each 

request for transfer or replacement of 

such permit, license, or endorsement, 

and for each fish trap or sea bass pot 

identification tag required under 

§ 622.6(b)(1)(i)(B). * * * 

* * * * * 

(g) * * * 

(1) Vessel permits, licenses, and 

endorsements and dealer permits. A 

vessel permit, license, or endorsement 

or a dealer permit or endorsement 

issued under this section is not 

transferable or assignable, except as 

provided in paragraph (m) of this 

section for a commercial vessel permit 

for Gulf reef fish, in paragraph (n) of this 

section for a fish trap endorsement, in 

paragraph (o) of this section for a king 

mackerel gillnet permit, in paragraph (q) 

of this section for a commercial vessel 

permit for king mackerel, in paragraph 

(r) of this section for a charter vessel/ 

headboat permit for Gulf coastal 

migratory pelagic fish or Gulf reef fish, 

in paragraph (s) of this section for a 

commercial vessel moratorium permit 

for Gulf shrimp, in § 622.17(c) for a 

commercial vessel permit for golden 

crab, in § 622.18(e) for a commercial 

vessel permit for South Atlantic 

snapper-grouper, or in § 622.19(e) for a 

commercial vessel permit for South 

Atlantic rock shrimp. A person who 

acquires a vessel or dealership who 

desires to conduct activities for which a 

permit, license, or endorsement is 

required must apply for a permit, 

license, or endorsement in accordance 

with the provisions of this section and 

other applicable sections of this part. If 

the acquired vessel or dealership is 

currently permitted, the application 

must be accompanied by the original 

permit and a copy of a signed bill of sale 

or equivalent acquisition papers. In 

those cases where a permit, license, or 

endorsement is transferable, the seller 

must sign the back of the permit, 

license, or endorsement and have the 

signed transfer document notarized. 

* * * * * 

(h) * * * 

(1) * * * Unless specified otherwise, 

a vessel owner or dealer who has been 

issued a permit, license, or endorsement 

under this section must renew such 

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Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 67459 

permit, license, or endorsement on an 

annual basis. 

* * * * * 

■ 7. In § 622.7, paragraphs (gg) and (hh) 

are added to read as follows: 

§ 622.7 Prohibitions. 

* * * * * 

(gg) Fail to comply with any provision 

related to the Gulf red snapper IFQ 

program as specified in § 622.16. 

(hh) Falsify any information required 

to be submitted regarding the Gulf red 

snapper IFQ program as specified in 

§ 622.16. 

■ 8. The stay of § 622.16 is lifted and the 

section is revised to read as follows: 

§ 622.16 Gulf red snapper individual 

fishing quota (IFQ) program. 

(a) General. This section establishes 

an IFQ program for the commercial 

fishery for Gulf red snapper. Under the 

IFQ program, the RA initially will 

assign eligible participants IFQ shares 

equivalent to a percentage of the annual 

commercial red snapper quota, based on 

their applicable historical landings. 

Shares determine the amount of Gulf 

red snapper IFQ allocation, in pounds 

gutted weight, a shareholder is initially 

authorized to possess, land, or sell in a 

given calendar year. Shares and annual 

IFQ allocation are transferable. See 

§ 622.4(a)(2)(ix) regarding a requirement 

for a vessel landing red snapper subject 

to this IFQ program to have a Gulf red 

snapper IFQ vessel endorsement. See 

§ 622.4(a)(4)(ii) regarding a requirement 

for a Gulf red snapper IFQ dealer 

endorsement. Details regarding 

eligibility, applicable landings history, 

account setup and transaction 

requirements, constraints on 

transferability, and other provisions of 

this IFQ system are provided in the 

following paragraphs of this section. 

(1) Scope. The provisions of this 

section apply to Gulf red snapper in or 

from the Gulf EEZ and, for a person 

aboard a vessel with a Gulf red snapper 

IFQ vessel endorsement as required by 

§ 622.4(a)(2)(ix) or for a person with a 

Gulf red snapper IFQ dealer 

endorsement as required by 

§ 622.4(a)(4)(ii), these provisions apply 

to Gulf red snapper regardless of where 

harvested or possessed. 

(2) Duration. The IFQ program 

established by this section will remain 

in effect until it is modified or 

terminated; however, the program will 

be evaluated by the Gulf of Mexico 

Fishery Management Council every 5 

years. 

(3) Electronic system requirements. (i) 

The administrative functions associated 

with this IFQ program, e.g., registration 

and account setup, landing transactions, 

and transfers, are designed to be 

accomplished online; therefore, a 

participant must have access to a 

computer and Internet access and must 

set up an appropriate IFQ online 

account to participate. Assistance with 

online functions is available from IFQ 

Customer Service by calling 1–866–425–

7627 Monday through Friday between 8 

a.m. and 4:30 p.m. eastern time. 

(ii) The RA will mail initial 

shareholders and dealers with Gulf reef 

fish dealer permits information and 

instructions pertinent to setting up an 

IFQ online account. Other eligible 

persons who desire to become IFQ 

participants by purchasing IFQ shares or 

allocation or by obtaining a Gulf red 

snapper IFQ dealer endorsement must 

first contact IFQ Customer Service at 1–

866–425–7627 to obtain information 

necessary to set up the required IFQ 

online account. Each IFQ participant 

must monitor his/her online account 

and all associated messages and comply 

with all IFQ online reporting 

requirements. 

(iii) During catastrophic conditions 

only, the IFQ program provides for use 

of paper-based components for basic 

required functions as a backup. The RA 

will determine when catastrophic 

conditions exist, the duration of the 

catastrophic conditions, and which 

participants or geographic areas are 

deemed affected by the catastrophic 

conditions. The RA will provide timely 

notice to affected participants via 

publication of notification in the 

Federal Register, NOAA weather radio, 

fishery bulletins, and other appropriate 

means and will authorize the affected 

participants’ use of paper-based 

components for the duration of the 

catastrophic conditions. NMFS will 

provide each IFQ dealer the necessary 

paper forms, sequentially coded, and 

instructions for submission of the forms 

to the RA. The paper forms will also be 

available from the RA. The program 

functions available to participants or 

geographic areas deemed affected by 

catastrophic conditions will be limited 

under the paper-based system. There 

will be no mechanism for transfers of 

IFQ shares or allocation under the 

paper-based system in effect during 

catastrophic conditions. Assistance in 

complying with the requirements of the 

paper-based system will be available via 

IFQ Customer Service 1–866–425–7627 

Monday through Friday between 8 a.m. 

and 4:30 p.m. eastern time. 

(b) Procedures for initial 

implementation—(1) Determination of 

eligibility for initial IFQ shares. To be 

eligible as an initial IFQ shareholder a 

person must own a Class 1 or Class 2 

Gulf red snapper license as of November 

22, 2006. For the purposes of this 

paragraph, an owner of a license is 

defined as the person who controls 

transfer of the license and is listed as 

the qualifier on the face of the license. 

NMFS’ permit records are the sole basis 

for determining eligibility based on 

Class 1 or Class 2 license history. No 

more than one initial eligibility will be 

granted based upon a given Class 1 or 

Class 2 license. 

(2) Calculation of initial IFQ shares 

and allocation—(i) IFQ shares. The RA 

will calculate initial IFQ shares based 

on the highest average annual landings 

of Gulf red snapper associated with each 

shareholder’s current Class 1 or Class 2 

license during the applicable landings 

history. The applicable landings history 

for a Class 1 license owner whose 

license was not issued based on 

historical captain status includes any 10 

consecutive years of landings data from 

1990 through 2004; for a Class 1 license 

owner whose license was issued on the 

basis of historical captain status, all 

years of landings data from 1998 

through 2004; and for a Class 2 license 

holder, any 5 years of landings data 

from 1998 through 2004. All landings 

associated with a current Class 1 or 

Class 2 license for the applicable 

landings history, including those 

reported by a person who held the 

license prior to the current license 

owner, will be attributed to the current 

license owner. Only legal landings 

reported in compliance with applicable 

state and Federal regulations will be 

accepted. Each shareholder’s initial 

share is derived by dividing the 

shareholder’s highest average annual 

landings during the applicable landings 

history by the sum of the highest 

average annual landings of all 

shareholders during the respective 

applicable landings histories. Initial IFQ 

shares will not be issued in 

denominations of less than 0.0001 

percent. 

(ii) Initial share set-aside to 

accommodate resolution of appeals. 

During the first year of implementation 

of this IFQ program only, the RA will 

reserve a 3–percent IFQ share, prior to 

the initial distribution of shares, to 

accommodate resolution of appeals, if 

necessary. Any portion of the 3–percent 

share remaining after the appeals 

process is completed will be distributed 

as soon as possible among initial 

shareholders in direct proportion to the 

percentage share each was initially 

allocated. If resolution of appeals 

requires more than a 3–percent share, 

the shares of all initial shareholders 

would be reduced accordingly in direct 

proportion to the percentage share each 

was initially allocated. 

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67460 Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 

(iii) IFQ allocation. IFQ allocation is 

the amount of Gulf red snapper, in 

pounds gutted weight, an IFQ 

shareholder or allocation holder is 

authorized to possess, land, or sell 

during a given fishing year. IFQ 

allocation is derived at the beginning of 

each year by multiplying a shareholder’s 

IFQ share times the annual commercial 

quota for Gulf red snapper. 

(iv) Special procedure for initial 

calculation of 2007 IFQ allocations. 

Because of uncertainty regarding the 

2007 commercial quota for Gulf red 

snapper and the timing of its 

implementation and to avoid the 

possibility of having to revoke some 

proportion of initial allocation if the 

quota was subsequently reduced, the RA 

may initially calculate the 2007 IFQ 

allocations based on a proxy 

commercial quota. If a commercial 

quota adjustment for Gulf red snapper 

has not been submitted for review by 

the Secretary of Commerce in time for 

calculation of 2007 IFQ allocations, the 

RA will initially calculate 2007 

allocations based on a proxy 

commercial quota of 2.55 million lb 

(1.16 million kg). Alternatively, if a 

commercial quota adjustment for Gulf 

red snapper has been submitted for 

review by the Secretary of Commerce in 

time to allow calculation of 2007 

allocations, the RA will base 2007 IFQ 

allocations on the proposed quota. 

Under either scenario, as soon as the 

actual 2007 commercial quota is final, 

but no later than July 1, 2007, the RA 

will adjust the 2007 IFQ allocations, as 

necessary, consistent with the actual 

quota. 

(3) Shareholder notification regarding 

landings history, initial determination of 

IFQ shares and allocations, and IFQ 

account setup information. (i) As soon 

as possible after November 22, 2006, the 

RA will mail each Class 1 or Class 2 red 

snapper license owner information 

pertinent to the IFQ program. This 

information will include—

(A) Gulf red snapper landings 

associated with the owner’s license 

during each year of the applicable 

landings history; 

(B) The highest average annual red 

snapper landings based on the owner’s 

applicable landings history; 

(C) The owner’s initial IFQ share 

based on the highest average annual 

landings associated with the owner’s 

applicable landings history; 

(D) The initial IFQ allocation; 

(E) Instructions for appeals; 

(F) General instructions regarding 

procedures related to the IFQ online 

system, including how to set up an 

online account; and 

(G) A user identification number--the 

personal identification number (PIN) 

will be provided in a subsequent letter. 

(ii) The RA will provide this 

information, via certified mail return 

receipt requested, to the license owner’s 

address of record as listed in NMFS’

permit files. A license owner who does 

not receive such notification from the 

RA by December 22, 2006 must contact 

the RA to clarify eligibility status and 

landings and initial share information. 

(iii) The initial share information 

provided by the RA is based on the 

highest average landings associated with 

the owner’s applicable landings history; 

however, a license owner may select a 

different set of years of landings, 

consistent with the owner’s applicable 

landings history, for the calculation of 

the initial IFQ share. The license owner 

must submit that information to the RA 

postmarked no later than December 22, 

2006. If alternative years, consistent 

with the applicable landings history, are 

selected, revised information regarding 

shares and allocations will be posted on 

the online IFQ accounts no later than 

January 1, 2007. A license owner who 

disagrees with the landings or eligibility 

information provided by the RA may 

appeal the RA’s initial determinations. 

(4) Procedure for appealing IFQ 

eligibility and/or landings information. 

The only items subject to appeal under 

this IFQ system are initial eligibility for 

IFQ shares based on ownership of a 

Class 1 or Class 2 license, the accuracy 

of the amount of landings, and correct 

assignment of landings to the license 

owner. Appeals based on hardship 

factors will not be considered. Appeals 

must be submitted to the RA 

postmarked no later than April 1, 2007 

and must contain documentation 

supporting the basis for the appeal. The 

RA will review all appeals, render final 

decisions on the appeals, and advise the 

appellant of the final decision. 

(i) Eligibility appeals. NMFS’ records 

of Class 1 and Class 2 licenses are the 

sole basis for determining ownership of 

such licenses. A person who believes 

he/she meets the permit eligibility 

criteria based on ownership of a vessel 

under a different name, as may have 

occurred when ownership has changed 

from individual to corporate or vice 

versa, must document his/her 

continuity of ownership. 

(ii) Landings appeals. Landings data 

for 1990 through 1992 are not subject to 

appeal. Appeals regarding landings data 

for 1993 through 2004 will be based 

solely on NMFS’ logbook records. If 

NMFS’ logbooks are not available, state 

landings records or data that were 

submitted in compliance with 

applicable Federal and state regulations, 

on or before June 30, 2005, can be used. 

(5) Dealer notification and IFQ account 

setup information. As soon as possible 

after November 22, 2006, the RA will 

mail each dealer with a valid Gulf reef 

fish dealer permit information pertinent 

to the IFQ program. Any such dealer is 

eligible to receive a red snapper IFQ 

dealer endorsement which can be 

downloaded from the IFQ website at 

ifq.sero.nmfs.noaa.gov once an IFQ 

account has been established. The 

information package will include 

general information about the IFQ 

program and instructions for accessing 

the IFQ website and establishing an IFQ 

dealer account. 

(c) IFQ operations and requirements—

(1) IFQ Landing and transaction 

requirements. (i) Gulf red snapper 

subject to this IFQ program can only be 

possessed or landed by a vessel with a 

Gulf red snapper IFQ vessel 

endorsement. Such red snapper can 

only be received by a dealer with a Gulf 

red snapper IFQ dealer endorsement. 

The person landing the red snapper 

must hold or be assigned IFQ allocation 

at least equal to the pounds of red 

snapper landed, except as provided in 

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

(ii) An IFQ shareholder or his agent or 

employee assigned to land the 

shareholder’s allocation can legally 

exceed, by up to 10 percent, the 

shareholder’s allocation remaining on 

the last fishing trip of the fishing year. 

Any such overage will be deducted from 

the shareholder’s allocation for the 

subsequent fishing year. 

(iii) The dealer is responsible for 

completing a landing transaction report 

for each landing and sale of Gulf red 

snapper via the IFQ website at 

ifq.sero.nmfs.noaa.gov at the time of the 

transaction in accordance with reporting 

form and instructions provided on the 

website. This report includes, but is not 

limited to, date, time, and location of 

transaction; weight and actual ex-vessel 

value of red snapper landed and sold; 

and information necessary to identify 

the fisherman, vessel, and dealer 

involved in the transaction. The 

fisherman must validate the dealer 

transaction report by entering his 

unique PIN number when the 

transaction report is submitted. After 

the dealer submits the report and the 

information has been verified, the 

website will send a transaction approval 

code to the dealer and the allocation 

holder. 

(2) IFQ cost recovery fees. As required 

by section 304(d)(2)(A)(i) of the 

Magnuson-Stevens Act, the RA will 

collect a fee to recover the actual costs 

directly related to the management and 

enforcement of the Gulf red snapper IFQ 

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Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 67461 

program. The fee cannot exceed 3 

percent of the ex-vessel value of Gulf 

red snapper landed under the IFQ 

program. Such fees will be deposited in 

the Limited Access System 

Administration Fund (LASAF). Initially, 

the fee will be 3 percent of the actual 

ex-vessel value of Gulf red snapper 

landed under the IFQ program, as 

documented in each landings 

transaction report. The RA will review 

the cost recovery fee annually to 

determine if adjustment is warranted. 

Factors considered in the review 

include the catch subject to the IFQ cost 

recovery, projected ex-vessel value of 

the catch, costs directly related to the 

management and enforcement of the 

IFQ program, the projected IFQ balance 

in the LASAF, and expected nonpayment of fee liabilities. If the RA 

determines that a fee adjustment is 

warranted, the RA will publish a 

notification of the fee adjustment in the 

Federal Register. 

(i) Payment responsibility. The IFQ 

allocation holder specified in the 

documented red snapper IFQ landing 

transaction report is responsible for 

payment of the applicable cost recovery 

fees. 

(ii) Collection and submission 

responsibility. A dealer who receives 

Gulf red snapper subject to the IFQ 

program is responsible for collecting the 

applicable cost recovery fee for each IFQ 

landing from the IFQ allocation holder 

specified in the IFQ landing transaction 

report. Such dealer is responsible for 

submitting all applicable cost recovery 

fees to NMFS on a quarterly basis. The 

fees are due and must be submitted, 

using pay.gov via the IFQ system, no 

later than 30 days after the end of each 

calendar-year quarter; however, fees 

may be submitted at any time before 

that deadline. Fees not received by the 

deadline are delinquent. 

(iii) Fee payment procedure. For each 

IFQ dealer, the IFQ system will post, on 

individual message boards, an end-ofquarter statement of cost recovery fees 

that are due. The dealer is responsible 

for submitting the cost recovery fee 

payments using pay.gov via the IFQ 

system. Authorized payments methods 

are credit card, debit card, or automated 

clearing house (ACH). Payment by 

check will be authorized only if the RA 

has determined that the geographical 

area or an individual(s) is affected by 

catastrophic conditions. 

(iv) Fee reconciliation process—

delinquent fees. The following 

procedures apply to an IFQ dealer 

whose cost recovery fees are delinquent. 

(A) On or about the 31st day after the 

end of each calendar-year quarter, the 

RA will send the dealer an electronic 

message via the IFQ website and official 

notice via mail indicating the applicable 

fees are delinquent; the dealer’s IFQ 

account has been suspended pending 

payment of the applicable fees; and 

notice of intent to annul the dealer’s IFQ 

endorsement. 

(B) On or about the 61st day after the 

end of each calendar-year quarter, the 

RA will mail to a dealer whose cost 

recovery fee payment remains 

delinquent, official notice documenting 

the dealer’s IFQ endorsement has been 

annulled. 

(C) On or about the 91st day after the 

end of each calendar-year quarter, the 

RA will refer any delinquent IFQ dealer 

cost recovery fees to the appropriate 

authorities for collection of payment. 

(v) Annual IFQ dealer ex-vessel value 

report. The IFQ online system will 

generate an annual IFQ Dealer Ex-Vessel 

Value Report for each IFQ dealer. The 

report will include quarterly and annual 

information regarding the amount and 

value of IFQ red snapper received by the 

dealer, the associated cost recovery fees, 

and the status of those fees. The dealer’s 

acceptance of this report constitutes 

compliance with the annual dealer IFQ 

reporting requirement. 

(3) Measures to enhance IFQ program 

enforceability—(i) Advance notice of 

landing. The owner or operator of a 

vessel landing IFQ red snapper is 

responsible for calling NMFS Office of 

Law Enforcement at 1–866–425–7627 at 

least 3 hours, but no more than 12 

hours, in advance of landing to report 

the time and location of landing and the 

name of the IFQ dealer where the red 

snapper are to be received. Failure to 

comply with this advance notice of 

landing requirement will preclude 

authorization to complete the landing 

transaction report required in paragraph 

(b)(5)(iii) of this section and, thus, will 

preclude issuance of the required 

transaction approval code. 

(ii) Time restriction on landing and 

offloading. IFQ red snapper may be 

landed and offloaded only between 6 

a.m. and 6 p.m., local time. 

(iii) Restrictions on transfer of IFQ red 

snapper. At-sea or dockside transfer of 

IFQ red snapper from one vessel to 

another vessel is prohibited. 

(iv) Requirement for transaction 

approval code. Possession of IFQ red 

snapper from the time of transfer from 

a vessel through possession by a dealer 

is prohibited unless the IFQ red snapper 

are accompanied by a transaction 

approval code verifying a legal 

transaction of the amount of IFQ red 

snapper in possession. 

(4) Transfer of IFQ shares and 

allocation. Through January 1, 2012, 

IFQ shares and allocations can be 

transferred only to a person who holds 

a valid commercial vessel permit for 

Gulf reef fish; thereafter, IFQ shares and 

allocations can be transferred to any 

U.S. citizen or permanent resident alien. 

However, a valid commercial permit for 

Gulf reef fish, a Gulf red snapper IFQ 

vessel endorsement, and Gulf red 

snapper IFQ allocation are required to 

possess, land or sell Gulf red snapper 

subject to this IFQ program. 

(i) Share transfers. Share transfers are 

permanent, i.e., they remain in effect 

until subsequently transferred. Transfer 

of shares will result in the 

corresponding allocation being 

automatically transferred to the person 

receiving the transferred share 

beginning with the fishing year 

following the year the transfer occurred. 

However, within the fishing year the 

share transfer occurs, transfer of shares 

and associated allocation are 

independent--unless the associated 

allocation is transferred separately, it 

remains with the transferor for the 

duration of that fishing year. A share 

transfer transaction that remains in 

pending status, i.e., has not been 

completed and verified with a 

transaction approval code, after 30 days 

from the date the shareholder initiated 

the transfer will be cancelled, and the 

pending shares will be re-credited to the 

shareholder who initiated the transfer. 

(ii) Share transfer procedures. A 

shareholder must initiate the request for 

the RA to transfer IFQ shares by using 

the online Gulf red snapper IFQ website 

at ifq.sero.nmfs.noaa.gov. Following the 

instructions provided on the website, 

the shareholder must enter pertinent 

information regarding the transfer 

request including, but not limited to, 

amount of shares to be transferred, 

which must be a minimum of 0.0001 

percent; name of the eligible transferee; 

and the value of the transferred shares. 

For the first 5 years this IFQ program is 

in effect, an eligible transferee is a 

person who has a valid commercial 

vessel permit for Gulf reef fish; is in 

compliance with all reporting 

requirements for the Gulf reef fish 

fishery and the red snapper IFQ 

program; is not subject to sanctions 

under 15 CFR part 904; and who would 

not be in violation of the share cap as 

specified in paragraph (c)(6) of this 

section. Thereafter, share transferee 

eligibility will be extended to include 

U.S. citizens and permanent resident 

aliens who are otherwise in compliance 

with the provisions of this section. 

NMFS will evaluate and verify the 

information entered. If the information 

is not accepted, NMFS will send the 

shareholder an electronic message 

explaining the reason(s). If the 

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67462 Federal Register / Vol. 71, No. 225 / Wednesday, November 22, 2006 / Rules and Regulations 

information is accepted, NMFS will 

send the shareholder an initial 

transaction approval code and make an 

application for share transfer available 

for downloading and printing. The 

shareholder and eligible transferee must 

complete the application, have their 

signatures notarized, and mail the 

signed application to the RA at least 30 

days prior to the date on which the 

applicant desires to have the transfer 

effective. The signed application must 

be received by the RA prior to December 

1. See paragraph (c)(4)(v) of this section 

regarding a prohibition on transfer 

during December of each year. If the RA 

approves the application for transfer, 

the online system will send the 

shareholder and the transferee an 

electronic message acknowledging the 

approval; a transfer is effective upon 

receipt of the message. The adjusted 

shares resulting from a transfer may be 

viewed online by each of the respective 

shareholders involved in the 

transaction. If the RA does not approve 

the transfer application, the RA will 

return the application to the shareholder 

with an explanation and instructions for 

correcting any deficiencies. 

(iii) Allocation transfers. An 

allocation transfer is valid only for the 

remainder of the fishing year in which 

it occurs; it does not carry over to the 

subsequent fishing year. Any allocation 

that is unused at the end of the fishing 

year is void. 

(iv) Allocation transfer procedures. 

Unlike share transfers which require a 

notarized application for transfer, 

allocation transfers can be accomplished 

online via the red snapper IFQ website. 

An IFQ allocation holder can initiate an 

allocation transfer by logging on to the 

red snapper IFQ website at 

ifq.sero.nmfs.noaa.gov, entering the 

required information, including but not 

limited to, name of an eligible transferee 

and amount of IFQ allocation to be 

transferred and price, and submitting 

the transfer electronically. If the transfer 

is approved, the website will provide a 

transaction approval code to the 

transferor and transferee confirming the 

transaction. 

(v) Prohibition of transfer of shares 

during December each year. No IFQ 

shares may be transferred during 

December of each year. This period is 

necessary to provide the RA sufficient 

time to reconcile IFQ accounts, adjust 

allocations for the upcoming year if the 

commercial quota for Gulf red snapper 

has changed, and update shares and 

allocations for the upcoming fishing 

year. 

(5) Fleet management and assignment 

of IFQ allocation. An IFQ shareholder or 

IFQ allocation holder who owns more 

than one vessel with a valid Gulf reef 

fish vessel permit and a valid Gulf red 

snapper IFQ vessel endorsement may 

assign IFQ allocation to a person aboard 

such vessel and provide that person the 

IFQ account information necessary to 

conduct landing transactions. 

(6) IFQ share cap. No person, 

including a corporation or other entity, 

may individually or collectively hold 

IFQ shares in excess of the maximum 

share initially issued to a person for the 

2007 fishing year, as of the date appeals 

are resolved and shares are adjusted 

accordingly. For the purposes of 

considering the share cap, a 

corporation’s total IFQ share is defined 

as the sum of the IFQ shares held by the 

corporation and the IFQ shares held by 

individual shareholders of the 

corporation. A corporation must 

identify the shareholders of the 

corporation and their percent of shares 

in the corporation. 

(7) Redistribution of shares resulting 

from permanent permit or endorsement 

revocation. If a shareholder’s 

commercial vessel permit for Gulf reef 

fish or Gulf red snapper IFQ vessel 

endorsement has been permanently 

revoked under provisions of 15 CFR part 

904, the RA will redistribute the IFQ 

shares held by that shareholder 

proportionately among remaining 

shareholders based upon the amount of 

shares each held just prior to the 

redistribution. During December of each 

year, the RA will determine the amount 

of revoked shares, if any, to be 

redistributed, and the shares will be 

distributed at the beginning of the 

subsequent fishing year. 

(8) Annual recalculation and 

notification of IFQ shares and 

allocation. On or about January 1 each 

year, IFQ shareholders will be notified, 

via the IFQ website at 

ifq.sero.nmfs.noaa.gov, of their IFQ 

share and allocation for the upcoming 

fishing year. These updated share values 

will reflect the results of applicable 

share transfers and any redistribution of 

shares resulting from permanent 

revocation of applicable permits or 

endorsements under 15 CFR part 904. 

Allocation is calculated by multiplying 

IFQ share times the annual red snapper 

commercial quota. Updated allocation 

values will reflect any change in IFQ 

share, any change in the annual 

commercial quota for Gulf red snapper, 

and any debits required as a result of 

prior fishing year overages as specified 

in paragraph (c)(1)(ii) of this section. 

IFQ participants can monitor the status 

of their shares and allocation 

throughout the year via the IFQ website. 

8A. Section 622.16, with the 

exception of paragraph (b), is stayed 

until January 1, 2007. 

§ 622.34 [Amended] 

■ 9. In § 622.34, paragraph (l) is 

removed and reserved. 

■ 10. In § 622.42, paragraph (a)(1)(i) is 

revised to read as follows: 

§ 622.42 Quotas. 

* * * * * 

(a) * * * 

(1) * * * 

(i) Red snapper—4.65 million lb (2.11 

million kg), round weight. 

* * * * * 

§ 622.44 [Amended] 

■ 11. In § 622.44, paragraph (d) is 

removed and reserved. 

[FR Doc. 06–9342 Filed 11–17–06; 4:47 pm] 

BILLING CODE 3510–22–S 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 1 

RIN 3038–AC34 

Financial Reporting Requirements for 

Introducing Brokers 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Final rulemaking. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’ or 

‘‘CFTC’’) is amending Commission 

regulations to require introducing 

brokers (‘‘IBs’’) submitting CFTC 

financial Forms 1–FR–IB that are 

certified by independent public 

accountants to file such financial 

reports electronically with the National 

Futures Association (‘‘NFA’’). The 

amendments also require that certified 

Financial and Operational Combined 

Uniform Single Reports (‘‘FOCUS’’

Reports), submitted by IBs registered 

with the Securities and Exchange 

Commission (‘‘SEC’’) as securities 

brokers or dealers (‘‘B/Ds’’) in lieu of 

Form 1–FR–IB, be filed either 

electronically or in paper form in 

accordance with the rules of the NFA. 

The CFTC also is amending Commission 

regulations to require that, with respect 

to any such electronic filing, a paper 

copy including the original signed 

certification be maintained by the IB in 

its records for a period of five years in 

accordance with Commission 

Regulation 1.31. 

DATES: Effective Date: December 22, 

2006. 

FOR FURTHER INFORMATION CONTACT: 

Thomas J. Smith, Deputy Director and 

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