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###### Department of Commerce

###### National Oceanic and Atmospheric Administration

          - 50 CFR Part 679
          - [Docket No. 131115973-4885-02]
          - RIN 0648-BD74

# AGENCY:

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

# ACTION:

Final rule.

# SUMMARY:

NMFS publishes regulations to implement Amendment 96 to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) and an amendment to the Pacific halibut commercial fishery regulations for waters in and off Alaska. Amendment 96 to the FMP and the regulatory amendment modify the Individual Fishing Quota Program for the Fixed-Gear Commercial Fisheries for Pacific Halibut and Sablefish in Waters in and off Alaska (IFQ Program). This action will remove a regulation that prohibits a Gulf of Alaska (GOA) Community Quota Entity (CQE) from transferring and holding small blocks of halibut and sablefish quota share (QS). This action will allow CQEs to acquire additional QS and facilitate CQE community resident participation in the IFQ Program. This action promotes the goals and objectives of the Magnuson-Stevens Fishery Conservation and Management Act, the Northern Pacific Halibut Act of 1982, the FMP, and other applicable law.

# DATES:

Effective December 8, 2014.

# ADDRESSES:

                        Electronic copies of this rule, the Regulatory Impact Review (RIR)/Initial Regulatory Flexibility Analysis (IRFA) (collectively, Analysis), and the proposed rule prepared for Amendment 96 and the regulatory amendment may be obtained from                         *http://www.regulations.gov*                         or from the NMFS Alaska Region Web site at                         *http://alaskafisheries.noaa.gov.*                         An electronic copy of the 2010 Review of the CQE Program under the Halibut and Sablefish IFQ Program prepared by the North Pacific Fishery Management Council (Council) is available from the Council Web site at                         *www.npfmc.org/​community-quota-entity-program.*

# FOR FURTHER INFORMATION CONTACT:

Peggy Murphy, (907) 586-7228.

# SUPPLEMENTARY INFORMATION:

## Regulatory Authority

                    NMFS issues regulations to implement Amendment 96 to the FMP and revise the halibut and sablefish provisions of the CQE Program. The Council recommended and NMFS approved the FMP in 1978 under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) (16 U.S.C. 1801*et seq.*). Regulations implementing the FMP and general regulations governing sablefish appear at 50 CFR part 679. Fishing for Pacific halibut (                    *Hippoglossus stenolepis*) is managed by                           ( print page 66325)                        the International Pacific Halibut Commission (IPHC) and the Council under the Northern Pacific Halibut Act of 1982 (Halibut Act). Section 773(c) of the Halibut Act authorizes the Council to develop regulations that are in addition to, and not in conflict with, approved IPHC regulations. Council-recommended regulations may be implemented by NMFS only after approval by the Secretary of Commerce.                

## Background

                    The Notice of Availability for Amendment 96 was published in the                     **Federal Register**                     on July 25, 2014 (79 FR 43377), with a 60-day comment period that ended September 23, 2014. The Secretary approved Amendment 96 on October 21, 2014. The Council submitted the proposed rule to NMFS, and it was published in the                     **Federal Register**                     on August 7, 2014 (79 FR 46237). The 30-day comment period on the proposed rule ended on September 8, 2014. NMFS received a total of three comment letters on Amendment 96 and the proposed rule during the comment periods. A summary of the comments and the responses by NMFS are provided under the “Comments and Responses” section of this preamble.                

                    A detailed review of the provisions of Amendment 96, the proposed regulations, and the rationale for these regulations is provided in the preamble to the proposed rule (79 FR 46237, August 7, 2014). The proposed rule is available from the NMFS Alaska Region Web site (see                     **ADDRESSES**                    ).                

This final rule implements Amendment 96 and amends CQE Program regulations. Amendment 96 amends the FMP to remove a restriction that prohibits a GOA CQE from transferring and holding small blocks of sablefish QS. This final rule amends the CQE Program regulations by removing a restriction that prohibits a GOA CQE from transferring and holding small blocks of halibut QS.

## The IFQ and CQE Programs

                    The IFQ Program is a limited access privilege program for the commercial fixed-gear halibut and sablefish (                    *Anoplopoma fimbria*) fisheries in the exclusive economic zone off Alaska. The IFQ Program limits access to the halibut and sablefish fisheries to those persons holding QS in specific regulatory areas. Quota shares equate to individual harvesting privileges that are given effect on an annual basis through the issuance of IFQ permits. An annual IFQ permit authorizes the permit holder to harvest a specified amount of IFQ halibut or sablefish in a regulatory area. An explanation of the IFQ Program can be found in the final rule implementing the program (58 FR 59375, November 9, 1993).                

The Council recommended the CQE Program as an amendment to the IFQ Program in 2002 (Amendment 66 to the FMP), and NMFS implemented the program in 2004 (69 FR 23681, April 30, 2004). The CQE Program provides fishing opportunities to communities in the GOA that depend on the halibut and sablefish fisheries. Another CQE Program, known as the Aleutian Islands CQE Program, provides similar opportunities to coastal communities in the Aleutian Islands (79 FR 8870, February 14, 2014). The Aleutian Islands CQE Program is not affected by this action and is not addressed further. Where the terms “CQE” or “CQE Program” are used in this preamble, they are referring to the regulations and management measures applicable to the GOA CQE Program, and not to the Aleutian Islands CQE Program.

The CQE Program allows 45 small, remote, coastal communities in the GOA to transfer and hold catcher vessel halibut and sablefish QS in specific regulatory areas (see Table 21 to Part 679). The CQE is the holder of the QS and is issued the IFQ annually by NMFS. The CQE leases the IFQ to individual GOA community residents. The program's structure promotes community access to QS to generate participation in, and fishery revenues from, the commercial halibut and sablefish fisheries. Long-term retention of QS by the CQE creates a permanent asset for the community to use. Both CQE- and non-CQE-held QS provide community residents fishing access that promotes the economic health of communities. The final rule implementing the CQE Program describes the CQE Program objectives and provisions (69 FR 23681, April 30, 2004).

Several IFQ Program provisions apply to CQE Program participants. These provisions include regulatory area and vessel size categories; QS use caps; and QS blocks. A detailed discussion of these provisions and others that restrict CQE transfer and holding of QS is provided in the proposed rule preamble for this action (79 FR 46237, August 7, 2014) and in the final rule implementing the CQE Program (69 FR 23681, April 30, 2004). Except for the small block restrictions that this final rule will revise, these QS use provisions will continue to apply to the CQE program participants. For background purposes, a summary of the QS use provisions follows.

### IFQ Regulatory Area and Vessel Size Categories

Fixed-gear halibut and sablefish QS is specific to regulatory area and vessel size category. In the GOA there are three IPHC halibut regulatory areas—Areas 2C (Southeast Alaska), 3A (Central Gulf of Alaska), and 3B (Western Gulf of Alaska)—and four sablefish regulatory areas: Southeast (SE), West Yakutat (WY), Central GOA (CG), and Western GOA (WG). Each QS is assigned to a vessel category based upon the size of the vessel from which IFQ halibut and sablefish may be harvested and/or processed (see regulations at § 679.40(a)(5)). Halibut QS and its associated IFQ are assigned to one of four vessel categories in each regulatory area: Freezer (catcher/processor) category (category A); catcher vessel greater than 60 ft. length overall (LOA) (category B); catcher vessel 36 ft. to 60 ft. LOA (category C); and catcher vessel 35 ft. LOA or less (category D). Sablefish QS and its associated IFQ are assigned to one of three vessel categories in each regulatory area: Freezer (catcher/processor) category (category A); catcher vessel greater than 60 ft. LOA (category B); and catcher vessel 60 ft. LOA or less (category C).

CQEs may obtain by transfer and hold certain vessel categories of QS in specified areas in order to facilitate local support of community fishing operations (see § 679.40 and Table 21 to Part 679). CQEs may obtain by transfer and hold sablefish QS in all IFQ regulatory areas and vessel categories. However, CQEs are restricted with respect to the IFQ regulatory area(s) and vessel category of halibut QS they may transfer and hold. A detailed explanation of the IFQ regulatory area(s) and vessel category of halibut QS a CQE can transfer and hold is provided in the proposed rule for this action (79 FR 46237, August 7, 2014).

                    The CQE Program authorizes CQEs to obtain by transfer and hold catcher vessel QS: Category B, C, and D halibut QS, with area-specific limitations for category D halibut QS; and category B and C sablefish QS. However, the vessel size categories do not apply to IFQ derived from QS held by a CQE, with an exception for category D halibut QS in Area 3A. The prohibition on CQEs' transfer and holding of category D halibut QS in Area 2C, the limitation on the amount of category D halibut QS that an Area 3A CQE may transfer and hold, and the requirement that IFQ derived from Area 3A category D QS must (among other restrictions) be fished on a category D vessel are discussed in more detail in the                           ( print page 66326)                        preamble to the proposed rule for this action (79 FR 46237, August 7, 2014). These limitations were intended to balance the Council's objective for providing CQEs with increased opportunities to acquire halibut QS with its objective to limit potential competition for category D halibut QS between non-CQE and CQE QS holders. Vessel category D halibut QS is generally the least expensive category of halibut QS because non-CQE IFQ derived from category D QS must be used on the smallest category of catcher vessel. It is often transferred and held by smaller operations or by new entrants to the IFQ fisheries.                

### CQE Program QS Use Caps

Individual community use caps limit the amount of halibut QS and sablefish QS that each CQE may transfer and hold on behalf of a community. The individual community cap is limited to the individual IFQ Program use caps. Each GOA CQE is limited to transferring and holding a maximum of 1 percent of the Area 2C halibut QS (see regulations at § 679.42(f)(2)(i)) and a maximum of 0.5 percent of the combined Area 2C, 3A, and 3B halibut QS (see regulations at § 679.42(f)(2)(ii)). Each GOA CQE also is limited to transferring and holding a maximum of 1 percent of the Southeast sablefish QS (see regulations at § 679.42(e)(5)) and a maximum of 1 percent of all combined sablefish areas QS (see regulations at § 679.42(e)(4)(i)).

In addition to individual community use caps, cumulative community use caps limit the amount of halibut QS and sablefish QS that all CQE eligible communities within an IFQ regulatory area can transfer and hold. The cumulative community use caps limit all CQEs in the GOA to a maximum of 21 percent of the total halibut QS pool (see regulations at § 679.42(f)(5)) and a maximum of 21 percent of the total sablefish QS pool (see regulations at § 679.42(e)(6)) in each IFQ regulatory area in the GOA.

### QS Blocks

The IFQ Program initially issued QS in blocks. A block is a consolidation of QS units that cannot be subdivided upon transfer (see regulations at § 679.41(e)(1)). One of the primary purposes of QS blocks and the subsequent amendments to the block regulatory provisions was to conserve small blocks of QS that could be transferred at a relatively low cost by crew members and new entrants to the IFQ fisheries. The IFQ Program incorporates a “sweep-up” provision to allow very small blocks of QS to be permanently consolidated, up to specified limits, so as to be practical to fish (see regulations at §§ 679.41(e)(2) and (e)(3)).

## QS Block Use Cap

A block use cap restricts how many blocks of QS an individual can transfer and hold. The purpose of this cap is to limit the consolidation of blocked QS and to ensure that smaller aggregate units would be available on the market, thereby maintaining the diversity in operation types that exist in more remote coastal communities.

The IFQ Program also limits the number of blocks a CQE may transfer and hold. CQEs may transfer and hold up to a maximum of 10 blocks of halibut QS and 5 blocks of sablefish QS in each GOA regulatory area (see regulations at § 679.42(g)(1)(ii)). These limits on CQE block holdings and the limit on where CQEs can hold QS restrict CQEs to 20 halibut QS blocks (10 blocks in each of two regulatory areas) and 20 sablefish QS blocks (5 blocks in each of four regulatory areas).

## Minimum Block Size

During development of the CQE Program, the Council and NMFS determined that if no limit on the acquisition of blocked QS was established, then gains in CQE holdings could reflect losses of QS holdings among residents of the same CQE communities. Therefore, CQEs were restricted from transferring or holding blocked QS of less than a minimum size to preserve fishing opportunities for new entrants in certain regulatory areas.

CQE program regulations prohibit CQEs from transferring and holding a QS block that is less than the “sweep up” limit, or the number of QS units initially issued as blocks that could be combined to form a single block (see regulations at §§ 679.41(e)(4) and (e)(5)). Quota share blocks that are less than or equal to the “sweep up” limit are known as “small blocks.” The amount of QS units that comprise a small block in each IFQ regulatory area in the GOA is specified for the halibut fishery (see regulations at § 679.41(e)(3)) and for the sablefish fishery (see regulations at § 679.41(e)(2)). The CQE Program regulations do not prohibit CQEs in Area 3B from transferring or holding small blocks of halibut QS. Fewer small blocks exist in Area 3B and few new entrants in Area 3B have sought these small blocks of halibut QS (69 FR 23681, April 30, 2004).

## Actions Implemented by This Final Rule

This final rule amends the FMP and halibut and sablefish CQE regulations to remove the restriction on CQEs' ability to purchase and use small blocks of halibut and sablefish QS less than or equal to the sweep-up limit currently specified in regulations at §§ 679.41(e)(5) and 679.41(e)(4), respectively. The proposed rule preamble provides a detailed description of the rationale for removing the regulation prohibiting a GOA CQE from transferring and holding small blocks of halibut QS (79 FR 46237, August 7, 2014).

Under this final rule, all CQEs in the GOA may receive by transfer any size block of halibut and sablefish QS to hold for use by eligible community members. CQEs will be able to transfer similar sized blocks of QS in the market place as individual non-CQE QS holders. The objectives of this final rule are to provide CQE communities in the GOA with increased opportunity to transfer and hold QS and sustain participation of CQE community residents in the IFQ halibut and sablefish fisheries.

This final rule also updates Table 21 to Part 679 to clarify the category of halibut QS (A, B, C and D) and IFQ regulatory area of the QS that a CQE can transfer by area. This revision to Table 21 to Part 679 provides a clear and more comprehensive summary of CQE harvesting privileges.

## Effects of This Final Rule

                    A description of the anticipated effects of this action is included in the preamble to the proposed rule and is summarized here. This final rule provides additional opportunities for CQEs to transfer and hold QS, and NMFS expects it will not adversely affect the ability of non-CQE fishery participants to transfer and hold small blocks of QS. In evaluating this action, the Council and NMFS considered the current participation of CQE and non-CQE QS holders in the IFQ fishery, and the potential impact on QS access and markets. The Council and NMFS determined that removing the small block restriction from the CQE Program should improve the ability of CQEs to obtain the most affordable blocks of QS without negatively impacting the ability of non-CQE fishery participants to obtain similar size blocks of QS. See the proposed rule preamble and section 2.7.2 of the Analysis for additional detail (see                     **ADDRESSES**                    ).                

                    Analysis of the percent of blocked and unblocked QS in 2013 (the year of the most recent available data) indicates that the percentage of small block QS relative to the total amount of QS in the GOA IFQ regulatory areas is greater for halibut (11.3 percent of the total Area                           ( print page 66327)                        2C and Area 3A halibut QS) than sablefish (3.7 percent of the total SE., WY, CG, WG sablefish QS). Therefore, while this action will impact sablefish QS holders, it likely will have a greater impact on halibut QS holders. As described in the preamble to the proposed rule, section 2.7.2.1 of the Analysis considers the maximum potential impacts of the action, which assumes that all eligible communities form CQEs and secure funding to transfer all of the newly available small blocks of QS, up to CQE Program limits described above and in regulations at §§ 679.41 and 679.42. The Analysis indicates this outcome is unlikely given reasonably foreseeable trends in QS holdings by CQEs.                

Analysis of the amount of small block QS by regulatory area in 2013 indicates that cumulative use caps on CQE QS ownership will not constrain the maximum potential transfer of QS by CQEs. The more likely constraint on CQE transfer and holding of QS will be the limit on the number of blocks that a CQE can transfer and hold in any one regulatory area (10 halibut blocks and 5 sablefish blocks). Even at maximum CQE participation, QS block limits and the reservation of a limited amount of Area 3A D share QS for purchase by CQEs representing communities in Area 3A will prevent CQEs from collectively acquiring all small block halibut QS made available under this action. Thus, the Council and NMFS determined that small block halibut QS will continue to be available to non-CQE participants in the IFQ halibut fishery under this final rule. See section 2.7.2.1 of the Analysis for additional detail.

For sablefish, under allowable block limits, CQEs will be able collectively to transfer and hold all of the available sablefish small block QS in each IFQ regulatory area. Given the financial barriers to CQE transfers of QS described in the Analysis and in the preamble to the proposed rule, the Council and NMFS determined it is unlikely that CQEs will transfer the maximum amount of small block sablefish QS made available by this action. Thus, small block sablefish QS will continue to be available to non-CQE participants in the IFQ sablefish fishery under this final rule. See sections 2.6.3.1 and 2.7.2.1 of the Analysis for additional detail.

Although this action allows CQEs to transfer and hold small blocks of A share halibut and sablefish QS, the Council and NMFS anticipate that CQE purchases of A share QS will be limited. Because IFQ derived from A share halibut and sablefish QS may be caught and processed at sea, A share QS is typically priced much higher than all other QS categories. In addition, the total amount of A share QS issued is small relative to all other categories of QS. Therefore, the potential impact of allowing CQEs to purchase small blocks of A share QS on new entrants, small-boat operations and CQE fishery participants will be minimal under this final rule. See sections 2.6.3.1 and 2.7.2.1 of the Analysis for additional detail.

To date, CQEs have transferred and held a limited amount of QS that likely has not negatively impacted non-CQE fishery participants' ability to acquire QS in the open market. Transferring and holding small block QS will benefit CQEs, their community members, and future community members, who tend to rely on these restricted blocks of mainly small vessel category QS. Allowing CQEs to transfer and hold small block QS could also enhance a CQE's ability to keep QS in remote communities and create some operational efficiencies that provide a net benefit to both the CQEs and their community residents.

## Changes From the Proposed Rule

There are no changes to the proposed regulations (79 FR 46237, August 7, 2014).

## Comments and Responses

During the public comment period on the Notice of Availability for Amendment 96 and the proposed rule to revise CQE program regulations, NMFS received three comment letters. Two letters from members of the public did not address the proposed action. These letters expressed concerns about fishery management policies that are outside the scope of this action. The third comment letter expressed concerns about and did not support Amendment 96 and the proposed rule. The letter was submitted by an organization representing non-CQE IFQ Program participants and contained six comments. NMFS' responses to the public comments on Amendment 96 and the proposed rule are presented below. No changes were made to this final rule in response to the comment letters received.

*Comment 1:*                     The commenter states that Amendment 96 violates National Standard 4 of the Magnuson-Stevens Act, which specifies that conservation and management measures shall not discriminate between residents of different states and that any allocation of fishing privileges must be fair and equitable. Amendment 96 benefits CQEs and residents of CQE communities at the expense of non-residents of Alaska that participate in the IFQ fishery. This is unfair, discriminatory, and contrary to the requirements of National Standard 4.                

*Response:*                     NMFS disagrees that Amendment 96 violates National Standard 4 of the Magnuson-Stevens Act. The Council and NMFS have determined that Amendment 96 is consistent with the requirements of the Magnuson-Stevens Act. The CQE Program was established to allow a group of non-profit entities to hold QS on behalf of residents of specific small, geographically isolated, rural communities located adjacent to the coast of the GOA with a historical link to the halibut and sablefish fisheries. Communities that do not meet the eligibility criteria may not participate in the program and do not benefit from the CQE Program. Communities that are excluded from the CQE Program include Alaska and non-Alaska communities. Therefore, this action is not predicated on an effort to discriminate between residents of different states.                

Amendment 96 removes a prohibition on CQEs' transferring and holding small blocks of QS. Non-CQE participants in the IFQ Program are not subject to this prohibition, so this action is not predicated upon any effort to unfairly advantage CQEs.

                    As described in the proposed rule preamble (79 FR 46237, August 7, 2014) and in section 2.2 of the Analysis, Amendment 96 and this final rule promote the Council's objective to provide an opportunity for CQE communities to acquire additional QS and facilitate sustained participation by CQE community residents in the IFQ Program. Since the inception of the IFQ Program, the number of resident halibut and sablefish QS holders has declined substantially in CQE communities. This transfer of QS and the associated fishing effort from CQE communities has limited the ability of residents to locally transfer and hold QS and reduced the diversity of fisheries to which fishermen in these communities have access (see section 2.6.1.2 of the Analysis). Fisheries participation by CQE community residents may also be limited because these individuals live in small, remote coastal communities and have a higher cost of participation than individuals living in larger communities with road access to supplies and markets (see section 2.6.3 of the Analysis). The Council and NMFS intend for Amendment 96 and this final rule to improve the ability of CQEs to obtain the most affordable blocks of QS and lease annual IFQ to community residents without negatively impacting the ability of non-CQE fishery                           ( print page 66328)                        participants to obtain similar size blocks of QS. Also see the response to comment 3.                

*Comment 2:*                     The commenter states that the Council's recommendation of Amendment 96 without considering their proposal is unfair and discriminatory. In February 2013, the commenter submitted a proposal to the Council that was similar to Amendment 96. The commenter proposed increasing the small block QS transfer and holding limits that apply to non-CQE participants in the IFQ Program. The Council denied the proposal and referred it to the IFQ Committee for consideration.                

*Response:*                     The Council did not deny the commenter's proposal to increase the amount of small block QS that may be transferred and held by non-CQE fishery participants, but referred the proposal to its IFQ Committee for review and discussion (see the minutes of the February 2013 Council meeting at                     *http://www.npfmc.org/​wp-content/​PDFdocuments/​minutes/​213Council.pdf.*). NMFS notes that referral of the commenter's proposal to the IFQ Committee is consistent with the established Council process for addressing proposed revisions to the IFQ Program. Under its long-established process, the Council accepts proposals from the public until a scheduled date prior to convening the IFQ Committee. The Council's IFQ Committee plays a significant role in reviewing proposals and developing recommendations to the Council for improvements to the IFQ Program. The IFQ Committee is a Council advisory body comprised of participants in the IFQ Program. The Council relies on the committee to review and prioritize the large numbers of proposals to revise the components of the IFQ Program that it receives each year. For additional detail on the Council's process for reviewing the IFQ Program, see the NMFS Web site at                     *https://alaskafisheries.noaa.gov/​ram/​ifq/​ifqpaper.htm.*                     NMFS has determined that Amendment 96 and this final rule are consistent with the Magnuson-Stevens Act and do not unfairly disadvantage or discriminate against non-CQE participants in the IFQ program. See the response to Comment 1.                

*Comment 3:*                     The commenter states that CQEs have an unfair financial advantage compared to non-CQE participants in the IFQ Program. CQEs are tax-exempt and can retain more revenue from their fishing activities than IFQ program participants who must pay taxes. The commenter is also aware of efforts to establish a low interest loan program for CQEs to purchase halibut and sablefish QS. The tax-exempt status of CQEs and the potential loan program discriminate against non-CQE fishermen and make it difficult for them to purchase QS.                

*Response:*                     NMFS disagrees that that CQEs have an unfair financial advantage compared to non-CQE participants in the IFQ Program. Section 2.6.3.4 in the Analysis and the proposed rule preamble describe that CQEs have had significant difficulties obtaining financing to transfer and hold QS, and that these difficulties have created a barrier to participation in the CQE Program. The Analysis describes that at prevailing QS prices, it is difficult or infeasible for CQEs to transfer and hold QS because they do not generally have assets to offer as collateral for a loan. In addition, the administrative cost necessary to establish and support the CQE organization likely makes it more difficult for a CQE to obtain financing to transfer and hold QS than for a non-CQE fishery participant who does not incur these administrative costs. Because CQEs hold QS and lease annual IFQ to local residents, there is a layer of both administrative cost and fiduciary responsibility that has made it difficult for CQEs to access funding sources to transfer and hold QS. The administrative overhead for a CQE includes arranging and maintaining financing for the QS, negotiating transfers of QS, developing and administering the criteria for distributing IFQ among potential lessees, and submitting annual reports to NMFS detailing its activities. As described in the Analysis, the prevailing price of QS has been sufficiently high that CQEs have not been able to afford the administrative costs, while leasing the shares to community residents at a reasonable rate, and still have funds remaining for debt repayment. This information provides strong evidence that CQEs do not have a financial advantage over non-CQE fishery participants.                

The Council and NMFS intend for this final rule to improve the ability of CQEs to transfer and hold QS by removing the prohibition on CQEs' holding small block QS. Removing this prohibition will provide CQEs with the opportunity to transfer and hold QS that is available at a lower cost, and therefore will be more affordable for CQEs.

As described in section 2.7.2 of the Analysis and in the preamble to the proposed rule, NMFS anticipates that Amendment 96 and this final rule will not adversely affect the ability of non-CQE participants to transfer and hold small blocks of QS. NMFS expects that this final rule may allow some redistribution of QS because it is intended to have distributional effects among QS holders by promoting the transfer of QS from existing QS holders to the CQE. However, based upon the Analysis, the Council and NMFS anticipate this final rule may provide additional opportunity for CQEs to transfer and hold more affordable QS without negatively impacting non-CQE participants in the IFQ Program (see section 2.7.3 of the Analysis for additional detail).

Section 2.7.2.4 of the Analysis and the proposed rule preamble note that removing the prohibition on CQEs purchasing small blocks of halibut and sablefish QS could create the potential for greater competition in the market for purchasing QS, which could result in higher QS prices. However, the Analysis notes that such increases in QS prices would occur only if CQEs can afford to pay as much or more for small block QS than non-CQE fishery participants. As described above and in section 2.6.3.4 of the Analysis, the difficulties that CQEs have faced in obtaining financing to transfer and hold QS are unlikely to change under Amendment 96 and this final rule. Therefore, the Council and NMFS determined it is unlikely that CQEs will accrue the financial assets to transfer a quantity of QS that would have a significant impact on QS price or on the ability of non-CQE fishery participants' to transfer and hold QS.

                    Several other factors are also likely to limit the impact of this final rule on non-CQE fishery participants. The most important factors are (1) a CQE must receive QS by transfer on the open market from a willing seller, (2) the amount of small block QS made available to CQEs through this final rule is limited to 11.3 percent of the combined halibut QS pool for Areas 2C and 3A, and 3.7 percent of the combined sablefish QS pool for the SE., WY, CG, and WG areas (see section 2.7.2.1 in the Analysis), and (3) each CQE will be subject to existing restrictions for CQEs on transferring and holding QS that are specified in regulation. Section 2.7.2.1 in the Analysis and the proposed rule preamble note that these restrictions include regulatory area designations applicable to all QS holders, individual and cumulative QS use caps specific to CQEs, a prohibition on CQEs transferring and holding category D halibut QS in Area 2C, a limitation on the amount of category D halibut QS that a CQE in Area 3A may transfer and hold, and the requirement that IFQ derived from Area 3A category D QS must (among other restrictions) be                           ( print page 66329)                        fished on a category D vessel. Therefore, NMFS does not anticipate that this final rule will negatively impact the ability of non-CQE fishery participants to transfer and hold small blocks of QS. NMFS has determined that Amendment 96 and this final rule are consistent with the Magnuson-Stevens Act and do not unfairly disadvantage or discriminate against non-CQE participants in the IFQ program. See the response to Comment 1.                

NMFS notes that development of a loan program for CQEs to transfer and hold QS is outside NMFS' authority and the scope of this action. The final rule implementing the CQE Program describes that the Council and NMFS have determined that a non-profit entity is the appropriate type of entity to transfer and hold halibut and sablefish QS on behalf of CQE communities (69 FR 23681, April 30, 2004). The decision to grant non-profit organizations tax-exempt status is based on State of Alaska law and is outside NMFS's authority and the scope of this action.

*Comment 4:*                     The commenter notes that the proposed rule states that the CQE program is essential to the survival of small Alaska communities because members of these communities either sold their initially issued QS or moved from their communities. The proposed rule also suggests that CQEs will offer “favorable lease terms as compared to the open market.” The commenter disagrees with these assertions. The CQE program will not address the issue of initial recipients selling their QS and moving from communities. The price of QS will rise and fall with the demands of the open market and a CQE cannot change this by offering favorable lease rates to community residents.                

*Response:*                     The final rule implementing the GOA CQE Program (69 FR 23681, April 30, 2004) and the proposed rule to implement Amendment 96 (79 FR 46237, August 7, 2014) describe that the Council and NMFS have determined that the CQE Program promotes community access to QS to generate participation in, and fishery revenues from, the commercial halibut and sablefish fisheries. The Council and NMFS recognize that significant barriers exist to CQEs obtaining financing to transfer and hold QS and these barriers have limited participation in the program. Amendment 96 and this final rule are intended to provide an opportunity for increased participation in the CQE program. The amendment allows CQEs to transfer and hold small block QS, which is generally available at a lower price than larger QS blocks or unblocked QS (see section 2.6.2 in the Analysis for additional detail).                

Residents of CQE communities who lease QS are likely to pay a lower rate to lease IFQ from a CQE than they would pay to lease IFQ from a non-CQE QS holder. Section 2.7.1.4 in the Analysis describes that the two currently active CQEs lease IFQ to community residents at a 45-percent rate, meaning that the CQE recovers 45 percent of the gross fishing revenue. The CQEs use these funds to repay the debt from purchasing QS and cover administrative costs, and may use some of the funds to transfer and hold additional QS in the future. NMFS cannot compare this 45-percent rate to the terms offered in private IFQ leases, since private parties do not submit lease data to NMFS, but it is likely that CQEs are offering favorable lease terms in relation to the market average. Based on this information, the Council and NMFS have determined that Amendment 96 and this final rule may enhance the ability of CQEs to transfer and hold QS for the long-term benefit of community residents. Also see the response to Comment 3.

*Comment 5:*                     The commenter states that individuals who are not eligible to lease IFQ from a CQE would be disadvantaged compared to fishermen harvesting CQE-held IFQ because those fishermen are subject to less restrictive regulations. For example, CQE fishery participants are exempt from the requirement to harvest IFQ on a vessel that corresponds to the vessel size category of the IFQ. In addition, CQEs must hire skippers to harvest annual IFQ. Non-CQE fishery participants are no longer allowed to hire a skipper without additional restrictions.                

*Response:*                     The final rule implementing the GOA CQE Program (69 FR 23681, April 30, 2004) and the proposed rule to implement Amendment 96 (79 FR 46237, August 7, 2014) describe that the Council and NMFS have identified specific objectives for the CQE Program and rationale for specific provisions that result in different requirements for CQE and non-CQE participants in the IFQ fisheries (see sections 2.6.1.2 and 2.6.2 in the Analysis for additional detail). These fishery provisions and requirements are consistent with the goals for the IFQ Program (58 FR 59375, November 9, 1993). NMFS has determined that this final rule meets the Council's objective to provide CQE communities in the GOA with long-term opportunities to access the halibut and sablefish fisheries, is consistent with the goals for the IFQ Program, and is not likely to have significant effects on individual participants in the IFQ fisheries or residents of non-CQE communities.                

In recommending Amendment 96, the Council and NMFS balanced the objective of promoting community access to QS and IFQ with the intent to maintain entry-level opportunities for fishermen residing in other fishery-dependent communities, consistent with the goals of the IFQ Program. This final rule allows IFQ derived from category B and C catcher vessel share QS held by a CQE to be fished from a vessel of any size regardless of the QS vessel category from which the IFQ was derived (see § 679.42(a)(2)(iii)). As described in section 2.6.1.2 of the Analysis and the final rule implementing the CQE Program, allowing IFQ derived from category B and C catcher vessel share QS held by a CQE to be fished from a vessel of any size facilitates the use of IFQ on the wide range of vessel types that fish in GOA communities.

                    NMFS notes that the CQE Program does not provide this flexibility for CQEs holding category D catcher vessel QS in Area 3A. Regulations at § 679.42(a)(2)(iii) specify that IFQ derived from category D catcher vessel QS held by a CQE must be fished on a category D vessel (35 ft. LOA or less), consistent with requirements for non-CQE QS holders. The Council and NMFS determined that CQEs should be subject to the same rules as other QS holders participating in the IFQ Program with regard to the use of category D catcher vessel QS in Area 3A. The comment refers to IFQ Program regulations that require, with some exceptions, a catcher vessel QS holder to be onboard the vessel during harvest and offloading of IFQ derived from their QS. As described in the final rule to implement the IFQ Program, this requirement at § 679.42(c) is intended to promote stewardship by providing active fishermen with a vested interest in the long-term productivity of the halibut and sablefish resources. CQE community fishermen do not hold QS but instead are allowed to lease IFQ derived from CQE-held QS. This final rule maintains regulations at § 679.42(c) and § 679.42(i)(5) that require that during harvest and offloading, the lessee must be onboard the vessel fishing the IFQ leased from the CQE, consistent with the owner onboard objective for the IFQ Program. The regulations at § 679.42(i)(5) specify that an individual who receives IFQ derived from QS held by a CQE may not designate a hired master to fish the community IFQ; the individual must be on board the vessel when the IFQ is being fished.                           ( print page 66330)                        Individuals who hold leases of IFQ from a CQE are considered IFQ permit holders and are subject to the regulations that govern other IFQ permit holders.                

*Comment 6:*                     A CQE is allowed to lease its IFQ and is able to benefit from QS through multiple generations. A non-CQE QS holder's beneficiaries do not receive the long-term benefit of the QS after the death of the non-CQE QS holder. The non-CQE QS holder's beneficiary may only lease the resulting IFQ for three years and after that time, the beneficiary must meet the eligibility requirements to hold QS and must be onboard the vessel when the IFQ is harvested, or they must transfer the QS. The commenter states that this is unfair to non-CQE fishery participants, will reduce the amount of QS on the market, and lead to higher QS purchase prices.                

*Response:*                     The commenter is correct that a CQE could lease IFQ to multiple generations of CQE community fishermen. NMFS notes this is consistent with the CQE Program objective to provide CQE community residents with long-term opportunities to access the halibut and sablefish fisheries, as described in the proposed rule, in section 2.6.1.2 of the Analysis, and in the final rule implementing the CQE Program (69 FR 23681, April 30, 2004).                

The commenter contrasts the CQE Program objective to promote long-term QS holdings by the community entity with regulations at § 679.41(k) that impose a limit on the amount of time a non-CQE QS holder's beneficiary may hold the QS after the non-CQE QS holder's death, if the beneficiary is not otherwise eligible to hold QS under IFQ Program requirements at § 679.41(d).

As described in the response to Comment 4, the Council and NMFS have determined that the CQE Program structure promotes community access to QS to generate participation in, and fishery revenues from, the commercial halibut and sablefish fisheries. To meet the objectives for the CQE Program, the Council and NMFS have developed different requirements for CQE and non-CQE participants in the IFQ fisheries (see the response to Comment 5). NMFS has determined that Amendment 96 and this final rule meet the Council's objective to provide the CQE communities with long-term opportunities to access the halibut and sablefish IFQ fisheries, is consistent with the goals for the IFQ Program, and is not likely to have significant effects on individual participants in the IFQ fisheries or residents of non-CQE communities.

Section 2.6.3.1 of the Analysis and the proposed rule preamble for this action (79 FR 46237, August 7, 2014) indicate that this action is not expected to result in increased demand for QS or a higher price for QS. These impacts have not been observed in the past and are not likely to occur in the future, given the present constraints on CQE access to investment capital and the range of other factors that also influence QS prices (see the response to Comment 3). Therefore, NMFS does not consider existing and potential future non-CQE QS holders to be significantly impacted by this action.

## Classification

The Administrator, Alaska Region, NMFS determined that Amendment 96 to the FMP is necessary for the conservation and management of the sablefish IFQ and CQE fisheries and that it is consistent with the Magnuson-Stevens Act and other applicable laws.

Regulations governing the U.S. fisheries for Pacific halibut are developed by the International Pacific Halibut Commission (IPHC), the Pacific Fishery Management Council, the North Pacific Fishery Management Council (Council), and the Secretary of Commerce. Section 5 of the Northern Pacific Halibut Act of 1982 (Halibut Act, 16 U.S.C. 773c) allows the regional council having authority for a particular geographical area to develop regulations governing the allocation and catch of halibut in U.S. Convention waters as long as those regulations do not conflict with IPHC regulations. The final action is consistent with the Council's authority to allocate halibut catches among fishery participants in the waters off Alaska.

This rule has been determined to be not significant for purposes of Executive Order 12866.

### Small Entity Compliance Guide

                    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 final regulatory flexibility analysis (FRFA), the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall also explain the actions a small entity is required to take to comply with a rule or group of rules. The preamble to the proposed rule and this final rule serve as the small entity compliance guide. This action does not require any additional compliance from small entities that is not described in the proposed and final rules. Copies of these rules are available from the NMFS Alaska Region Web site at                     *http://alaskafisheries.noaa.gov.*

### Final Regulatory Flexibility Analysis

A final regulatory flexibility analysis (FRFA) is required by the Regulatory Flexibility Act (RFA). This FRFA incorporates the Initial Regulatory Flexibility Analysis (IRFA) prepared for the proposed rule and addresses the applicable requirements of section 604 of the RFA. The IRFA was summarized in the “Classification” section of the preamble to the proposed rule.

Analytical requirements for the FRFA are described in the RFA, sections 604(a)(1) through (5), and summarized below.

The FRFA must contain:

1. A succinct statement of the need for, and objectives of, the rule;

2. A summary of the significant issues raised by the public comments in response to the initial regulatory flexibility analysis, a summary of the assessment of the agency of such issues, and a statement of any changes made in the proposed rule as a result of such comments;

3. A description and an estimate of the number of small entities to which the rule will apply, or an explanation of why no such estimate is available;

4. A description of the projected reporting, recordkeeping, and other compliance requirements of the rule, including an estimate of the classes of small entities which will be subject to the requirement and the type of professional skills necessary for preparation of the report or record; and

5. A description of the steps the agency has taken to minimize the significant economic impact on small entities consistent with the stated objectives of applicable statutes, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the final rule and why each one of the other significant alternatives to the rule considered by the agency which affect the impact on small entities was rejected.

The “universe” of entities to be considered in a FRFA generally includes only those small entities that can reasonably be expected to be directly regulated by the final rule. If the effects of the rule fall primarily on a distinct segment of the industry, or portion thereof (e.g., user group, gear type, geographic area), that segment is considered the universe for purposes of this analysis.

                    In preparing an FRFA, an agency may provide either a quantifiable or                           ( print page 66331)                        numerical description of the effects of a rule (and alternatives to the rule), or more general descriptive statements, if quantification is not practicable or reliable.                

## Need for and Objectives of This Final Rule

The objectives of this final rule are to provide CQE communities in the GOA with increased opportunity to transfer and hold QS and sustain participation of CQE community residents in the IFQ halibut and sablefish fisheries. An explanation of the need for this final rule is described in preamble of this rule and is not repeated here. This information also was described in detail in the preamble to the proposed rule (79 FR 46237, August 7, 2014).

## Comments on the IRFA

NMFS published the proposed rule on August 7, 2014 (79 FR 46237), with comments invited through September 8, 2014. NMFS received three comment letters from the public on Amendment 96 and the proposed rule. None of these comments specifically addressed the IRFA, but Comments 3, 4, 5 and 6 expressed concerns about the potential impacts of allowing CQEs in the GOA to transfer and hold small blocks of QS on non-CQE participants in the halibut and sablefish IFQ fisheries. NMFS' responses to these comments explain that the Council and NMFS considered the potential impacts of Amendment 96 and the final rule on participants in the halibut and sablefish fisheries and determined that it is unlikely to have negative impacts on non-CQE participants in the halibut and sablefish fisheries. Several provisions of the CQE Program, including QS blocks and QS use limits, restrict the amount of total QS that a CQE may obtain by transfer and hold. NMFS has determined that this final rule balances the objectives of the action with consideration of the impacts on non-CQE participants in the halibut and sablefish fisheries.

No comments on the proposed rule were filed with NMFS by the Chief Counsel for Advocacy of the Small Business Administration.

## Number and Description of Directly Regulated Small Entities

The determination of the number and description of small entities regulated by this action is based on small business standards established by the Small Business Administration (SBA). On June 12, 2014, the SBA issued a final rule revising the small business size standards for several industries effective July 14, 2014 (79 FR 33647, June 12, 2014). The rule increased the size standard for Finfish Fishing from $19.0 to 20.5 million. The new size standards were used to prepare the FRFA for this action.

At present, NMFS does not have sufficient ownership and affiliation information to determine precisely the number of entities in the IFQ Program that are “small” based on SBA guidelines, nor the number that will be adversely impacted by the present action. This FRFA therefore assumes that all directly regulated operations are small.

The action applies to 45 CQEs that are considered small entities under the RFA (Section 601(3)). The CQEs qualify as small not-for-profit organizations that are not dominant in their field. CQEs represent small communities that directly benefit from this action. Each of the communities qualifies as a small entity under the RFA since they are governments of towns or villages with populations less than 50,000 people. The CQE obtains by transfer and holds QS and makes the resulting IFQ available by lease to eligible harvesters that are community residents. Those harvesters are required to make a series of reports and declarations to NMFS in order to be found eligible to participate. Therefore, those harvesters are directly regulated small entities, although their number is unknown at this time. No adverse economic impact on community residents is expected under this action. Further, NMFS anticipates that any economic impacts accruing from the action to these small entities will be beneficial because their access to the IFQ halibut and sablefish fisheries will be improved.

Existing individual halibut and sablefish QS holders and new entrants to the IFQ fishery have potential to be impacted by this action, but are not directly regulated by this final rule. Currently, there are 2,565 unique halibut QS holders and 845 unique sablefish QS holders across all regulatory areas. These entities and future fishery entrants, of which the number is unknown, could potentially be impacted by this action. The most likely impact on these entities will occur if CQE transfer of QS results in a significant increase in the price for QS. The Analysis indicates this impact has not been observed in the past and is not likely to occur in the future, given the present constraints on CQE access to investment capital and the range of other factors that also influence QS prices (see section 2.6.3.1 of the Analysis). Therefore, existing and potential future non-CQE QS holders are not considered to be directly regulated by this action and are not further analyzed in this FRFA.

## Recordkeeping and Reporting Requirements

Implementation of this final rule will not change the recordkeeping or reporting requirements of the community residents that lease IFQ from GOA CQEs or the vessels they use to participate in the IFQ fisheries. No additional recordkeeping or reporting by directly regulated entities will be required by this action.

## Description of Significant Alternatives to the Final Rule That Minimize Adverse Impacts on Small Entities

The FRFA also requires a description of any significant alternatives to the rule that accomplish the stated objectives, are consistent with applicable statutes, and that minimize any significant economic impact of the final rule on small entities. The suite of potential actions includes two alternatives and associated options. A detailed description of these alternatives and options is provided in section 2.7 of the Analysis.

The significant alternative to the final action is the status quo alternative (Alternative 1). Alternative 1 does not have adverse economic impacts on CQEs or the resident QS holders in the CQE qualifying communities, which are the small entities directly regulated by this action. Alternative 1 does not meet the objectives of the action to promote more CQE access to QS and facilitate the sustained participation by CQE community residents in the IFQ Program. The preferred alternative implemented by this final rule, Alternative 2, is less restrictive on CQEs than Alternative 1, and is the least burdensome of the available alternatives for directly regulated small entities. Alternative 2 specified three options that allow CQEs to transfer and hold any size block of QS from any QS holder or a subset of QS holders depending on the option and determined by the location of the QS holder's residence.

                    The Council selected the least restrictive option under Alternative 2 (Option 1) that allows CQEs to transfer and hold any size block of halibut or sablefish QS. This option is the least burdensome on directly regulated small entities of all of the options considered, and minimizes any significant adverse economic impact. Allowing CQEs to transfer and hold any size block of QS should benefit their community members and future community members. Unrestricted transfer of blocked QS should enhance the CQE's ability to keep QS in remote                           ( print page 66332)                        communities and as a result provide for active participation of the CQE and community residents in the halibut and sablefish fisheries in the future. By increasing their QS holdings under this action, CQEs provide fishery access through leasing to community residents who are new entrants to the fishery or who currently fish small QS holdings and wish to increase their participation. Increased QS availability to CQEs under this action provides some operational efficiency and results in a net benefit to both the CQEs and their community residents.                

Option 2 allows CQE communities to transfer and hold any size block of halibut and sablefish QS from residents of any CQE community. Option 2 was not selected because it greatly limited the potential number of small blocks available to CQEs. Option 2 is more burdensome on directly regulated CQEs than Option 1.

Option 3 allows CQE communities to transfer and hold any size block of halibut and sablefish QS from residents of their CQE community, but not from any non-resident. Option 3 was not selected because it significantly limited the potential number of small blocks available to CQEs and the number of CQEs that could transfer small block QS. Option 3 is more burdensome on directly regulated CQEs than either Option 1 or 2. The Analysis did not identify any other alternatives that more effectively meet the RFA criteria to minimize adverse economic impacts on directly regulated small entities.

### Collection of Information Requirements

This rule contains no collection-of-information requirement subject to review and approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act (PRA).

# List of Subjects in 50 CFR Part 679

      - Alaska
      - Fisheries

Dated: October 30, 2014.

Samuel D. Rauch III,

Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service.

For the reasons set out in the preamble, NMFS amends 50 CFR part 679 as follows:

# PART 679—FISHERIES OF THE EXCLUSIVE ECONOMIC ZONE OFF ALASKA

1. The authority citation for part 679 continues to read as follows: 

Authority:16 U.S.C. 773*et seq.;*                             1801                             *et seq.;*                             3631                             *et seq.;*Pub. L. 108-447.                        

§ 679.41 

2. In § 679.41, remove paragraphs (e)(4) and (e)(5). 

3. Revise Table 21 to Part 679 to read as follows 
      ( print page 66333)          ( print page 66334)          ( print page 66335)          ( print page 66336)          ( print page 66337)    

[FR Doc. 2014-26466 Filed 11-6-14; 8:45 am]

BILLING CODE 3510-22-P