Source: https://www.federalregister.gov/documents/2010/12/16/2010-31641/shipping-act-merchant-marine-and-magnuson-stevens-fishery-conservation-and-management-act
Timestamp: 2017-11-20 01:02:45
Document Index: 556675450

Matched Legal Cases: ['art 253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009253', 'art 680', '§\u2009253', '§\u2009253', '§\u2009253', '§\u2009263', '§\u2009253', '§\u2009253']

Federal Register :: Shipping Act, Merchant Marine, and Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) Provisions; Fishing Vessel, Fishing Facility and Individual Fishing Quota Lending Program
A Rule by the National Oceanic and Atmospheric Administration on 12/16/2010
This final rule is effective January 18, 2011.
78619-78631 (13 pages)
Docket No. 0908061221-0533-02
2010-31641
https://www.federalregister.gov/d/2010-31641 https://www.federalregister.gov/d/2010-31641
NMFS issues these regulations pursuant to its authority under Chapter 537 of the Shipping Act, (formerly known as Title XI of the Merchant Marine Act of 1936, as amended and codified), as well as the Magnuson-Stevens Act. These regulations revise the operating rules of the Fisheries Finance Program (FFP or Program) and set forth procedures, eligibility criteria, loan terms, and other requirements related to FFP lending to the commercial fishing and aquaculture industries. FFP assistance includes Start Printed Page 78620loans for fishing vessels, fish processing facilities, aquaculture facilities, individual fishing quota (IFQ) permits, and participants in community development quota (CDQ) programs.
Copies of supporting documents that were prepared for this final rule, as well as the proposed rule, are available via the Federal e-Rulemaking portal, at http://www.regulations.gov. Those documents are also available from the NMFS, MB5, 1315 East-West Highway, Silver Spring, Maryland 20910.
Earl Bennett, NMFS, Fisheries Finance Program, 301-713-2390.
This final rule is also accessible at http://www.gpoaccess.gov/​fr.
On May 5, 2010, NMFS published a proposed rule to revise the FFP's lending regulations, as found in subpart B of 50 CFR Part 253, and requested public comment (75 FR 24549). This final rule strikes and replaces the current Subpart B with new regulations reflecting the 2006 revision of Chapter 537 of the Shipping Act (referenced as “Title XI”), the amended Magnuson-Stevens Act, Section 211(e) of the American Fisheries Act (AFA), Public Law 105-277, Div. C, Title II, Subtitle II, and the Coast Guard and Maritime Transportation Act of 2006, Public Law 109-241. In addition to revising definitions and updating general lending requirements, this final rule provides detail and clarity to the term “Actual Cost;” establishes procedures for refusing to approve, close or disburse a loan to borrowers with unresolved fisheries enforcement violations; and sets forth specialized terms and requirements for halibut and sablefish quota share (HSQS) loans, Bering Sea and Aleutian Island (BSAI) crab IFQ loans, and loans to North Pacific CDQ program participants.
Between May 5, 2010, and June 4, 2010, NMFS solicited comments on the proposed rule. On August 25, 2010, NMFS reopened the comment period for an additional two weeks when it discovered that a misprint in the preamble to the proposed rule could have hindered submission of comments on http://www.regulations.gov (75 FR [page 52300]).
Public comments on the proposed rule are summarized below, with responses from NMFS. NMFS received comments from four separate commenters. Overall, the comments about the Program and the proposed rule were favorable. Only one commenter had negative comments. The negative comments did not pertain to the specifics of the proposed rule, but addressed general NMFS policy.
Comment 1: The FFP has proved enormously beneficial to its participants. The proposed rule conforms to the intent of Congress, the North Pacific Fishery Management Council, and the Secretary of Commerce. The Crab IFQ loan program is the only step of crab rationalization that has yet to be implemented, so the proposed rule should be made final promptly.
Comment 2: The FFP is based on 1936 law and is outdated. The FFP should be a private sector lending operation, and there is no reason for American taxpayers to lend money to build boats or help commercial fishermen become profitable. There is much graft and corruption in the FFP; it should be defunded, and NMFS should be shut down.
Response: NMFS notes that the most recent version of the FFP's primary statutory authorization was enacted in 2006, so the FFP is in fact not outdated. Additionally, NMFS disagrees with the sentiments the commenter expressed about the fishing industry and the purpose of the FFP. Commercial fishing is an important industry and many Americans make their livelihood fishing. Maintaining a vibrant fishing sector is important to the National economy, as well as to coastal communities. NMFS notes that the FFP does not lend money to finance the construction of new vessels or improvements that increase harvest capacity. Moreover, NMFS disagrees with the commenter's characterization of the FFP. The FFP is audited annually by KPMG, an independent auditing company, and from time to time has been reviewed by NOAA auditors and the Department of Commerce's Office of the Inspector General. No allegations of graft or corruption have resulted from any of these reviews.
Comment 3: When NMFS funds a boat, it is likely to grant that boat too much quota to catch.
Response: FFP lending decisions and fishery management decisions are unrelated. Whether a vessel has an FFP loan has no bearing on whether it receives any authorization to harvest, process, or sell fish or fishery resources. Moreover, the FFP will not lend money for a fishing vessel unless the owner can demonstrate that it and the vessel possess all necessary harvest authorizations and permits and fully complies with all applicable law.
Comment 4: Americans do not want to fund aquaculture. Aquaculture pollutes horribly and spending on it is stupid and graft personified.
Response: NMFS disagrees. NMFS believes that sustainable aquaculture will create employment and business opportunities in coastal communities; provide safe, sustainable seafood; and complement NOAA's comprehensive strategy for maintaining healthy and productive marine populations, species, and ecosystems. All Program lending for aquaculture facilities require that such facilities are in compliance with all Federal, state and local environmental statutes and regulations. Additionally, they must possess all required licenses and permits.
Comment 5: A requirement for a preferred ship mortgage when financing a fishing vessel is not set forth in the proposed rule.
Response: NMFS notes the comment. Taken together, 46 U.S.C. 53709(b)(1) and (b)(4) limit FFP loans to 80 percent of the actual cost or depreciated actual cost of collateral pledged as security. NMFS acknowledges that the statutory provisions require the FFP to take a security interest in project property; otherwise the statutory terms would be rendered meaningless. Although the FFP's past practice has always been to take a security interest in project property, NMFS has clarified that it will take security interest in project property in this final rule in response to this comment. Such security interest may consist of, for example, a preferred ship mortgage for vessel financings, a real property deed of trust, mortgage, assignment of lease or other adequate collateral interest for aquaculture and shoreside facilities, etc. The final rule retains the Program's discretion to require additional collateral, as the FFP deems necessary, to protect the Program's credit interest.
Comment 6: Subject to a few exceptions, the proposed rule expresses a clear policy against financing the construction of new vessels or vessel improvements that increase harvest capacity. This policy, which has the effect of precluding the use of FFP loans to construct new vessels, should not apply in rationalized quota fisheries where total allowable catch is allocated to quota holders. In such fisheries, increasing a vessel's harvest capacity is irrelevant because each quota holder is limited to harvesting only a specific Start Printed Page 78621amount of fish. In addition, replacing existing vessels would reduce fuel consumption and vessel traffic as older platforms are replaced with larger, more efficient ones. Section 253.26(d)(1) should be amended to allow the FFP to lend for, “Activities that assist in the transition to reduced fishing capacity or where such activities will not adversely increase fishing effort in targeted fisheries.”
Response: Although NMFS acknowledges that regulatory fishing effort controls (especially in fisheries that may allocate specific amounts of catch with catch shares) can effectively manage harvest capacity, NMFS declines to change its capacity neutral lending policy, as requested by the commenter. However, NMFS notes that vessel improvements that assist in the transition to reduced fishing capacity, as well as those adding technologies or upgrades that improve data collection, reduce bycatch, improve harvest selectivity, reduce adverse environmental impacts of fishing gear, or improve safety, will continue to be eligible for financing even if such projects make ancillary increases to a vessel's harvest capacity.
Even in so called “rationalized fisheries,” adding new vessels and introducing vessels with augmented harvest capacity can push effort into other fisheries. Although overall harvest levels may remain unchanged, as a new vessel replaces an existing vessel, the owner or operator may have an incentive to sell the old vessel or employ it in a different fishery. Similarly, efficiencies brought on by increasing a vessel's harvest capacity may displace one or more additional vessels, and the displaced vessel(s) may exacerbate problems in other locations by moving into them. In addition to fishing effort displacement, the FFP lacks the staff resources to undertake detailed reporting and heightened due diligence required to support loan commitments for new vessel construction. Currently, the FFP's credit risk model doesn't account for the added risks associated with taking security interests in construction materials or addressing shipyard liens. Accordingly, NMFS will retain its policy against financing the construction of new vessels or vessel improvements primarily designed to increase harvest capacity.
Comment 7: Only the six CDQ group entities specified in section 305(i)(1)(D) of the Magnuson-Stevens Act should be eligible to participate in the CDQ loan program. Listing all of the villages and not the representative groups is misleading, since the villages can only participate through their groups. The CDQ program is a closed class and no new villages or entities can be added without a statutory amendment.
Response: While it is true that section 305(i) of the Magnuson-Stevens Act, as amended, focuses on the six CDQ groups, the CDQ lending program in this final rule is authorized by section 211(e) of the AFA. Section 211(e) of the AFA extends loan eligibility to the “communities eligible to participate” consistent with the section 305(i) provisions in effect in 1998, the time of the AFA's passage. However, NMFS recognizes that meaningful participation in the loan program would be enhanced by the involvement of the six CDQ groups. Accordingly, NMFS listed CDQ groups in the proposed rule and lists them again in this final rule. Although NMFS acknowledges that only the six groups and various villages listed in the final rule are eligible, NMFS will retain the section 253.29(c)(7) provision to allow statutory expansion of the CDQ program without the need to wait for a corresponding change in the regulations.
Comment 8: The 2006 Science-State-Commerce Appropriations Act, Public Law 109-108, as amended by section 416(c)(2) of the Coast Guard and Maritime Transportation Act of 2006, Public Law 109-241, and section 211(e) of the AFA, mandate that eligible CDQ borrowers be allowed to use loan funds for the purchase of all or part of ownership interests in fishing or processing vessels.
Response: NMFS agrees that borrowers in the CDQ loan program may use FFP financing to purchase full or partial interests in BSAI fishing vessels, shoreside facilities, and fishing licenses; and NMFS is willing to lend for these purposes, so long as the borrower is able to provide a valid security interest in collateral financed by the loan. However, NMFS has determined that the statutory provisions that the commenter cites do not create any “mandate” to lend that would supersede the requirements of other statutes. Notably, section 211(e) of the AFA expands the legal authority found in the FFP's primary statutory authority (the provisions referenced as “Title XI”) to allow the FFP to make loans to CDQ eligible entities, for the purposes specified in the statute. Also, the 2006 appropriation act, as amended, provides the actual funds to cover the budgetary cost under the Federal Credit Reform Act of 1990, 2 U.S.C. 661 et seq., so that the FFP can “afford” to make the loans. The authority to make CDQ loans still stems from Title XI, which requires that the FFP obtain adequate security interests in its collateral, and the FFP knows of no other provisions that supersede this requirement. Thus, while NMFS agrees that certain loan funds may be used to purchase all or part of an interest in a fishing or processing vessel, other requirements still attach to those loans, even if there is a “mandate” for such loans. NMFS cannot make any loans, even to CDQ borrowers for eligible purposes, without adequate security interest(s) in the collateral.
Comment 9: In order to allow CDQ program entities to purchase a partial interest in a vessel without a first lien position security interest, NMFS should change section 253.29(d)(2) of the rule by adding the following sentence: “Notwithstanding any other provision in this section, the Program shall not require a first lien position on the whole of the primary collateral when only a partial interest of such primary collateral is purchased with such loan funds.” NMFS' requirement for a lien upon the whole of a vessel has precluded one or more CDQ entities from using FFP loan funds to make a purchase of a partial ownership interest because the other owner did not want its interest encumbered by a NMFS preferred ship mortgage.
Response: NMFS is unable to make the requested change because it contravenes existing law. Under the Ship Mortgage Act, 46 U.S.C. sections 31301-30, a mortgage lien must apply to the whole vessel pledged as collateral in order to attain the status of a “first preferred ship mortgage,” regardless of whether the financing is used to purchase or acquire a whole vessel or only a partial ownership interest in the vessel. Pursuant to the requirements of 46 U.S.C. 53711, NMFS determines that a recorded preferred ship mortgage is the only instrument that will create, attach and perfect the requisite security interest in a federally documented vessel or its appurtenances, which in turn is necessary to protect the interest of the United States Government. NMFS has more flexibility to adjust the priority of its mortgage liens to allow for unique circumstances or complex transactions, but NMFS is unable to alter the requirements of the Ship Mortgage Act.
Comment 10: The relevant statutes and the proposed rule mandate flexibility in regards to the collateral requirements for FFP loans to the CDQ program entities.
Response: Although Title XI grants NMFS some discretion to adjust collateral requirements, the Program's authorizing statute still requires that the FFP, at a minimum, take a security interest in the property that the loan finances or refinances. NMFS does not Start Printed Page 78622construe the proposed regulations or the statutory provisions applicable to CDQ lending as superseding the required security determinations, loan limits and collateral requirements set forth in statute, in particular 46 U.S.C. 53709 and 53711. Moreover, NMFS is not under any requirement to approve every loan application. Nevertheless, NMFS remains committed to make reasonable loans to CDQ groups with as much flexibility in the collateral requirements, as is appropriate, within the bounds of its lending authorities.
Comment 11: Including the current market value of the land used by a facility that is pledged as collateral in the revised definition of Actual Cost better reflects the true value of the collateral.
Response: NMFS agrees. The unique nature of land can result in absurd results when using pure cost basis to determine asset value. For instance, using the purchase price and accounting costs may fail to reflect actual value if an applicant has owned the land for an extended period; and, purchase price alone may not reflect the true liquidation value of real property in times of price volatility. Accordingly, NMFS uses current market valued to determine asset value for the purposes of loans under the Program.
Comment 12: Valuing refinanced limited entry privileges using a current market value metric based on contemporaneous comparable sales will provide existing permit holders with flexibility for their existing permits.
Response: The FFP's experience over the last 12 years has shown that the value of quota can fluctuate over time, making current market value the most useful starting point to evaluate quota. In its approval process, the FFP will also examine the trend in value of individual fisheries' quota. However, NMFS emphasizes that the final rule retains the FFP's policy to deny applications that will disburse more than an applicant's outstanding indebtedness, calculated as principal and accrued interest, when refinancing an existing loan.
Comment 13: FFP funds should not be used to finance the purchase of new limited entry privileges at this time. This opposition is based solely on the practical fact that the FFP loan authority is not sufficiently funded at this time to enable the agency to meet all traditional loan applications, as well as financing for aquaculture, new IFQ financing, and new permit funding. Loan authority should be restored to the peak levels of prior budget cycles.
Response: The FFP receives two separate loan funding authorities. One is for the traditional loan program, and a separate authorization is for IFQ lending. Approving IFQ loans does not decrease the loan authority available for traditional loans and vice versa. Although NMFS has no final control over what is ultimately established as a lending ceiling, or funds given in annual appropriations legislation, NMFS will track the demand for both traditional and IFQ lending, and may include a request in its submission for the President's budget for greater loan authority if it deems it necessary.
Comment 14: FFP loan authority should be used to implement an IFQ loan program consistent with the Magnuson-Stevens Act. The onset of the new NOAA policy on catch shares will make FFP lending an important tool for the commercial fishing industry.
Response: NMFS notes the comment; however, NMFS points out that the decision to implement an IFQ program for any particular fishery lies with the appropriate Fishery Management Council.
General FFP credit standards and requirements section 253.11 (j) is changed to reflect the terms of 46 U.S.C. 53709(b)(1) and (b)(4) which, collectively, require that any loan amount be limited to 80 percent of the actual cost or depreciated actual cost of the property used as security. By implication, this will require the FFP to take a security interest in the specified project property, and that the value of the collateral pledged will limit the aggregate amount of the loan. The proposed rule allowed the Program to waive this requirement or allow substitute collateral. This rule now requires a first lien position on the project's primary collateral. The FFP may still take junior lien positions on secondary collateral. NMFS also made minor changes to correct errors or improve readability that do not affect the substantive provisions of the rule.
The NMFS Assistant Administrator has determined that this final rule is published under the authority of Chapter 537 of the Shipping Act, and is consistent with the Magnuson-Stevens Act, as amended, and other applicable law.
This final rule has been determined to be not significant for purposes of Executive Order 12866. This rule does not duplicate, overlap, or conflict with any other relevant Federal rules.
The Chief Counsel for Regulation of the Department of Commerce has certified to the Chief Counsel for Advocacy of the Small Business Administration (SBA) that this rule will not have a significant economic impact on a substantial number of small entities. The reasons for this certification are explained in the proposed rule (75 FR 24549) and are not fully repeated here. Briefly, the Department certified that this rule will not have a significant economic impact on a substantial number of small businesses because:
Both small and large entities benefit from the availability of long-term, fixed rate financing. Community Development Quota (CDQ) groups, which consist of 65 Western Alaskan villages combined into six community coalitions, benefit from the positive economic opportunities that FFP lending provides. The proposed rule has no adverse impacts on small business entities because of the nature of the rule. Applications by small business entities for program financing are voluntary. No mandatory requirements are placed on any small business. No small entities are directly regulated by this rule. Those small business entities that use the program do so for beneficial impacts.
This certification was provided to the public for comment, and NMFS received no comments or concerns related to the certification. Accordingly, no regulatory analysis is required and none has been prepared.
This final rule contains collection-of information requirements subject to the Paperwork Reduction Act (PRA). The collections of information have been approved by the Office of Management and Budget (OMB) under OMB Control Numbers 0648-0012 (traditional loan application) and 0648-0272 (IFQ loan application). The public reporting burden for the FFP financing is estimated to average eight hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding these burden estimates or any other aspect of this data information, including suggestions for reducing the burden, to NMFS (see ADDRESSES) and by e-mail to OIRA_submission@omb.eop.gov, or fax to 202-395-7285.
§ 253.1
(a) The regulations in this part pertain to fisheries assistance programs. Subpart B of this part governs the Fisheries Finance Program (FFP or the Program), which makes capacity neutral long-term direct fisheries and aquaculture loans. The FFP conducts all credit investigations, makes all credit determinations and holds and services all credit collateral.
(b) Subpart C of this part implements Public Law 99-659 (16 U.S.C. 4100 et seq.), which has two objectives:
(3) The scope of this part includes guidance on making financial assistance awards to States or Interstate Commissions to undertake projects in support of management of interjurisdictional fishery resources in both the executive economic zone (EEZ) and State waters, and to encourage States to enter into enforcement agreements with either the Department of Commerce or the Department of the Interior.
Act means Chapter 537 of Title 46 of the U.S. Code, (46 U.S.C. 53701-35), as may be amended from time to time.
Aquaculture facility means land, structures, appurtenances, laboratories, water craft built in the U.S., and any equipment used for the hatching, caring for, or growing fish, under controlled circumstances for commercial purposes, as well as the unloading, receiving, holding, processing, or distribution of such fish.
Charter fishing means fishing from a vessel carrying a “passenger for hire,” as defined in 46 U.S.C. 2101(21a), such passenger being engaged in recreational fishing, from whom consideration is provided as a condition of carriage on the vessel, whether directly or indirectly flowing to the owner, charterer, operator, agent, or any other person having an interest in the vessel.
(4) Any operations at sea in support of, or in preparation for, any activity described in paragraphs (1) through (3) of this section.
(5) Fishing does not include any scientific research activity which is conducted by a scientific research vessel.
Fishing industry for the purposes of this part, means the broad sector of the national economy comprised of persons or entities that are engaged in or substantially associated with fishing, including aquaculture, charter operators, guides, harvesters, outfitters, processors, suppliers, among others, without regard to the location of their Start Printed Page 78624activity or whether they are engaged in fishing for wild stocks or aquaculture.
(1) The refinancing or construction of a new fishing vessel or the financing or refinancing of a fishery or aquaculture facility or the refurbishing or purchase of an existing vessel or facility, including, but not limited to, architectural, engineering, inspection, delivery, outfitting, and interest costs, as well as the cost of any consulting contract the Program requires;
(4) Technologies or upgrades designed to improve collection and reporting of fishery-dependent data, to reduce bycatch, to improve selectivity or reduce adverse impacts of fishing gear, or to improve safety; or
RAM means the Restricted Access Management division in the Alaska Regional Office of NMFS or the office that undertakes the duties of this division to issue or manage quota shares.
U.S. means the United States of America and, for citizenship purposes, includes the fifty states, Commonwealth of Puerto Rico, American Samoa, the Territory of the U.S. Virgin Islands, Guam, the Republic of the Marshal Islands, the Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands, and any other commonwealth, territory, or possession of the United States, or any political subdivision of any of them.
(a) Principal. Unless explicitly stated otherwise in these regulations or applicable statutes, the amount of any loan may not exceed 80 percent of actual cost, as such term is described in § 253.16; provided that the Program may approve an amount that is less, in accordance with its credit determination.
(1) For venture capital purposes; or
(g) Audited financial statements. Audited financial statements will ordinarily be required for any obligor Start Printed Page 78625with large or financially complex operations, as determined by the program, whose financial condition the Program believes cannot be otherwise assessed with reasonable certainty.
(h) Consultant services. Expert consulting services may be necessary to help the Program assess a project's economic, technical, or financial feasibility. The Program will notify the applicant if an expert is required. The Program will select and employ the necessary consultant, but require the applicant to reimburse the Program for any fees charged by the consultant. In the event that an application requires expert consulting services, the loan will not be closed until the applicant fully reimburses the Program for the consulting fees. This cost may, at the Program's discretion, be included in the amount of the note. For a declined application, the Program may reimburse itself from the application fee as described in § 253.12, including any portion known as the commitment fee that could otherwise be refunded to the applicant.
(i) Property inspections. The Program may require adequate condition and valuation inspection of all property used as collateral as the basis for assessing the property's worth and suitability for lending. The Program may also require these at specified periods during the life of the loan. These must be conducted by competent and impartial inspectors acceptable to the Program. Inspection cost(s) will be at an applicant's expense. Those occurring before application approval may be included in actual cost, as actual cost is described in § 253.16.
(j) Collateral. The Program shall have first lien(s) on all primary project property pledged as collateral. The Program, at its discretion, may request additional collateral and will consider any additional collateral in its credit determinations.
(k) No additional liens. All primary project property pledged as collateral, including any additional collateral, shall be free of additional liens, unless the Program, at the request of the applicant, expressly waives this requirement in writing.
(l) General FFP credit standards apply. Unless explicitly stated otherwise in these rules, all FFP direct lending is subject to the above general credit standards and requirements found in §§ 253.12 through 253.30. The Program may adjust collateral, guarantee and other requirements to reflect individual credit risks.
§ 253.12
(a) Applicant. (1) An applicant must be a U.S. citizen and be eligible to document a vessel in the coastwise trade: and
(4) Applicants should apply to the appropriate NMFS Regional Financial Services Branch to be considered.
§ 253.13
(f) Credit decision. (1) The Program shall issue to approved applicants an AIP letter, which shall describe the terms and conditions of the loan, including (but not limited to) loan amounts, maturities, additional collateral, repayment sources or guarantees. Such terms and conditions are at the Program's sole discretion and shall also be incorporated in security documents that the Program prepares. An applicant's non-acceptance of any terms and conditions may result in an applicant's disqualification.
§ 253.14
(a) U.S. Note. (1) The U.S. Note will be in the form the Program prescribes.
(b) Security documents. (1) Each security document will be in the form the Program prescribes.Start Printed Page 78626
§ 253.15
Recourse against parties.
§ 253.16
(2) The current market value of appurtenant limited access privileges or transferable limited access privileges vested in the name of the obligor, the subject vessel or their owners, provided that such privileges are utilized by or aboard the subject vessel and will be pledged as collateral for the subject FFP financing.
(i) The project property must be located at such leased space or directly use such marine use rights;
(d) The actual cost of any Project that includes any combination of items described in paragraphs (a), (b) or (c) of this section shall be the sum of such calculations.
§ 253.17
§ 253.18
§ 253.19
The Program may require the pledge of a CCF account or annual deposits of some portion of the project property's net income into a dual-use CCF. A dual-use CCF provides the normal CCF tax-Start Printed Page 78627deferral benefits, but also gives the Program control of CCF withdrawals, recourse against CCF deposits, ensures an emergency refurbishing reserve (tax-deferred) for project property, and provides additional collateral.
§ 253.20
(a) Application fee. See §§ 253.10 and 253.12(b).
(b) Guarantee fee. For existing Guaranteed Loans, an annual guarantee fee will be due in advance and will be based on the guaranteed note's repayment provisions for the prospective year. The first annual guarantee fee is due at guarantee closing. Each subsequent guarantee fee is due and payable on the guarantee closing's anniversary date. Each is fully earned when due, and shall not subsequently be refunded for any reason.
§ 253.21
§ 253.22
§ 253.23
Upon default under the terms of any note, guarantee, security agreement, mortgage, or other security document the Program shall take remedial actions including, but not limited to, where appropriate, retaking or arrest of collateral, foreclosure, restructuring, debarment, referral for debt collection, or liquidation as it deems best able to protect the U.S. Government's interest.
§ 253.24
(b) Applicant disqualification. (1) Any issuance of any citation or Notice of Violation and Assessment by NMFS enforcement or other enforcement authority may constitute grounds for the Program to:
(i) Delay application or approval processing;
(ii) Delay loan closing;
(iii) Delay disbursement of loan proceeds;
(iv) Disqualify an applicant or obligor; or
(v) Declare default.
(2) The Program will not approve loans or disburse funds to any applicant found to have an outstanding, final and unappealable fisheries fine or other unresolved penalty until either: Such fine is paid or penalty has been resolved; or the applicant enters into an agreement to pay the penalty and makes all payments or installments as they are due. Failure to pay or resolve any such fine or penalty in a reasonable period of time will result in the applicant's disqualification.
(c) Foreclosure in addition to other penalties. In the event that a person with an outstanding balance on a Program loan or guarantee violates any ownership, lease, use, or other provision of applicable law, such person may be subject to foreclosure of property, in addition to any fines, sanctions, or other penalties.
§ 253.25
(d) Audit inquiry. An audit of a Program loan may be conducted at any time. Auditors, selected at the discretion of the Program or other agency of the United States, shall have access to any and all books, documents, papers and records of the obligor or any other party to a financing that the auditor(s) deem(s) pertinent, whether written, printed, recorded, produced or reproduced by any mechanical, magnetic or other process or medium.
§ 253.26
(b) Financing or refinancing. (1) Projects, other than those specified in paragraphs (a) (1) and (a)(2) of this section, may be financed, as well as refinanced.Start Printed Page 78628
(4) The Program may finance or refinance the purchase or refurbishment of any vessel or facility for which the Secretary has:
(i) Accelerated and/or paid outstanding debts or obligations;
(ii) Acquired; or
(d) Fisheries modernization. Notwithstanding any of this part, the Program may finance or refinance any:
(2) Technologies or upgrades designed to:
(i) Improve collection and reporting of fishery-dependent data;
(ii) Reduce bycatch;
(iii) Improve selectivity;
(iv) Reduce adverse impacts of fishing gear; or
(v) Improve safety.
(f) Maturity. Maturity may not exceed 25 years, but shall not exceed the project property's useful life. The Program, at its sole discretion, may set a shorter maturity period.
(g) Credit standards. Traditional loans are subject to all Program general credit standards and requirements. Collateral, guarantee and other requirements may be adjusted in accordance with the Program's assessment of individual credit risks.
§ 253.27
§ 253.28
(2) Fishermen who fish from small vessels means fishermen wishing to purchase IFQ for use on Category B, Category C, or Category D vessels, but who do not own, in whole or in part, any Category A or Category B vessels, as such vessels are defined in 50 CFR 679.40(a)(5) of this title.
(c) Fishermen fishing from small vessels. The Program may finance up to 80 percent of the cost of purchasing HSQS by a fisherman who fishes from a small vessel, provided that any such fisherman shall:
(2) Not own an aggregate quantity of halibut/sablefish QS (including the loan QS) of more than the equivalent of 50,000 lb. (22,679.6 kg) of IFQ during the origination year;
(3) Not own, in whole or in part, directly or indirectly (including through stock or other ownership interest) any vessel of the type that would have been assigned Category A or Category B HSQS under 50 CFR 679.40(a)(5);
(4) Possess the appropriate transfer eligibility documentation duly issued by the RAM for HSQS;
(5) Intend to be present aboard the vessel, as may be required by applicable regulations, as IFQ associated with halibut/sablefish QS financed by the loan is harvested; and
(6) Meet all other Program eligibility, qualification, lending and credit requirements.
(d) Refinancing. (1) The Program may refinance any existing debts associated with HSQS an applicant currently holds, provided that—
(2) The refinancing is in an amount up to 80 percent of HSQS' current market value; however, the Program will not disburse any amount that exceeds the outstanding principal balance, plus accrued interest (if any), of the existing HSQS debt being refinanced.
(h) Crew member transfer eligibility certification. The Program will accept RAM certification as proof that applicants are eligible to hold HSQS. The application of any person determined by RAM to be unable to receive such certification will be declined. Applicants who fail to obtain Start Printed Page 78629appropriate transfer eligibility certification within 45 working days of the date of application may lose their processing priority.
§ 253.29
(c) Eligible entities. The following communities, in accordance with applicable law and regulations are eligible to participate in the loan program:
(d) Loan terms. (1) CDQ loans may have terms up to thirty years, but shall not exceed the project property's useful life. The Program, at its sole discretion, may set a shorter maturity period.
(2) CDQ loans are subject to all Program general credit standards and requirements. Collateral, guarantee and other requirements may be adjusted to individual credit risks.
§ 253.30
(3) Whose aggregate holdings of QS will not exceed any limit on Crab QS holdings that may be in effect in the Crab FMP implementing regulations or applicable statutes in effect at the time of loan closing; and will not hold either individually or collectively, based on the initial QS pool, as published in 50 CFR Part 680, Table 8; and
(c) Refinancing. (1) The Program may refinance any existing debts associated with Crab QS that an applicant currently holds, provided that:
(2) The Program may refinance an amount up to 80 percent of Crab QS's current market value; however, the Program will not disburse any amount that exceeds the outstanding principal balance, plus accrued interest (if any), of the existing Crab QS debt being refinanced.
§§ 253.31—253.49
§ 253.50
The terms used in this subpart have the following meanings:Start Printed Page 78630
(2) Has entered into an enforcement agreement with the Secretary and/or the Secretary of the Interior for a fishery that is managed under an interstate fishery management plan;Start Printed Page 78631
§ 253.52
(a) General—(1) Designation of state agency. The Governor of each state shall notify the Secretary of which agency of the state government is authorized under its laws to regulate commercial fisheries and is, therefore, designated receive financial assistance awards. An official of such agency shall certify which official(s) is authorized in accordance with state law to commit the state to participation under the Act, to sign project documents, and to receive payments.
(e) Restrictions. (1) The total cost of all items included for engineering, planning, inspection, and unforeseen contingencies in connection with any works to be constructed as part of such a proposed project shall not exceed 10 percent of the total cost of such works, and shall be paid by the state as a part of its contribution to the total cost of the project.
§ 263.53
(a) Funds for disaster assistance. (1) The Secretary shall retain sole authority in distributing any disaster assistance funds made available under section 308(b) of the Act. The Secretary may distribute these funds after he or she has made a thorough evaluation of the scientific information submitted, and has determined that a commercial fishery failure of a fishery resource arising from natural or undetermined causes has occurred. Funds may only be used to restore the resource affected by the disaster, and only by existing methods and technology. Any fishery resource used in computing the states' amount under the apportionment formula in § 253.601(a) will qualify for funding under this section. The Federal share of the cost of any activity conducted under the disaster provision of the Act shall be limited to 75 percent of the total cost.
(2) In addition, pursuant to section 308(d) of the Act, the Secretary is authorized to award grants to persons engaged in commercial fisheries for uninsured losses determined by the Secretary to have been suffered as a direct result of a fishery resource disaster. Funds may be distributed by the Secretary only after notice and opportunity for public comment of the appropriate limitations, terms, and conditions for awarding assistance under this section. Assistance provided under this section is limited to 75 percent of an uninsured loss to the extent that such losses have not been compensated by other Federal or State Programs.
§ 253.54
[FR Doc. 2010-31641 Filed 12-15-10; 8:45 am]