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Timestamp: 2019-10-23 19:13:12
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Magnuson-Stevens Fishery Conservation and Management Act Provisions; Regional Fishery Management Council Membership; Financial Disclosure and Recusal, 57705-57713 [2018-24905] :: National Oceanic And Atmospheric Administration :: Department Of Commerce :: Regulation Tracker :: Justia
Justia Regulation Tracker Department Of Commerce National Oceanic And Atmospheric Administration Magnuson-Stevens Fishery Conservation and Management Act Provisions; Regional Fishery Management Council Membership; Financial Disclosure and Recusal, 57705-57713 [2018-24905]
Magnuson-Stevens Fishery Conservation and Management Act Provisions; Regional Fishery Management Council Membership; Financial Disclosure and Recusal, 57705-57713 [2018-24905]
Download as PDF Federal Register / Vol. 83, No. 222 / Friday, November 16, 2018 / Proposed Rules comments submitted at Regulations.gov, follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. For either manner of submission, EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be confidential business information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. EPA will generally not consider comments or comment contents located outside of the primary submission (i.e., on the web, cloud, or other file sharing system). For additional submission methods, please contact the person identified in the FOR FURTHER INFORMATION CONTACT section. For the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit http://www2.epa.gov/dockets/ commenting-epa-dockets. FOR FURTHER INFORMATION CONTACT: Gregory Becoat (215) 814–2036, or by email at becoat.gregory@epa.gov. SUPPLEMENTARY INFORMATION: On August 8, 2018 (83 FR 39009), EPA proposed approval to a SIP revision submitted by the Maryland Department of Environment (MDE) for COMAR 26.11.32—Control of Emissions of Volatile Organic Compounds from Consumer Products. The amendment is part of Maryland’s strategy to achieve and maintain the 8-hour ozone national ambient air quality standards (NAAQS) throughout the State. tkelley on DSKBCP9HB2PROD with PROPOSALS I. Extension of Comment Period EPA is reopening the comment period due to a comment noting that the California Air Resources Board (CARB) and the Ozone Transport Commission (OTC) model rules referenced in the NPR were not in the docket on www.regulations.gov. EPA has now put these documents into the docket identified by Docket ID No. EPA–R03– OAR–2018–0153 at www.regulations.gov. List of Subjects in 40 CFR Part 52 Environmental protection, Air pollution control, Consumer products, Incorporation by reference, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds. Authority: 42 U.S.C. 7401 et seq. VerDate Sep<11>2014 16:48 Nov 15, 2018 Jkt 247001 Dated: November 1, 2018. Cosmo Servidio, Regional Administrator, Region III. [FR Doc. 2018–25078 Filed 11–15–18; 8:45 am] BILLING CODE 6560–50–P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 600 [Docket No. 180212158–8158–01] RIN 0648–BH73 Magnuson-Stevens Fishery Conservation and Management Act Provisions; Regional Fishery Management Council Membership; Financial Disclosure and Recusal National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Proposed rule; request for comments. AGENCY: NMFS proposes changes to the regulations that address disclosure of financial interests by, and voting recusal of, council members appointed by the Secretary of Commerce (Secretary) to the regional fishery management councils established under the Magnuson-Stevens Fishery Conservation and Management Act. The regulatory changes are needed to provide guidance to ensure consistency and transparency in the calculation of a Council member’s financial interests; determine whether a close causal link exists between a Council decision and a benefit to a Council member’s financial interest; and establish regional procedures for preparing and issuing recusal determinations. This proposed rule is intended to improve regulations implementing the statutory requirements governing disclosure of financial interests and voting recusal at section 302(j) of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). DATES: Written comments must be received on or before March 6, 2019. ADDRESSES: You may submit comments on this document, identified by FDMS Docket Number NOAA–NMFS–2018– 0092, by any of the following methods: • Electronic Submission: Submit all electronic public comments via the Federal e-Rulemaking Portal. Go to www.regulations.gov/ #!docketDetail;D=NOAA-NMFS-20180092, click the ‘‘Comment Now!’’ icon, SUMMARY: PO 00000 Frm 00015 Fmt 4702 Sfmt 4702 57705 complete the required fields, and enter or attach your comments. • Fax: 301–713–1175. • Mail: Submit written comments to Alan Risenhoover, Director, Office of Sustainable Fisheries, National Marine Fisheries Service, 1315 East-West Highway, SSMC3, Silver Spring, MD 20910. Please mark the outside of the envelope ‘‘Financial Disclosure/ Recusal.’’ Instructions: Comments sent by any other method, to any other address or individual, or received after the end of the comment period, may not be considered by NMFS. All comments received are a part of the public record and will generally be posted for public viewing on www.regulations.gov without change. All personal identifying information (for example, name, address, etc.) submitted voluntarily by the commenter may be publicly accessible. Do not submit confidential business information or otherwise sensitive or protected information. NMFS will accept anonymous comments (enter ‘‘N/A’’ in the required fields if you wish to remain anonymous). Electronic copies of NMFS Policy Directive 01–116 Fishery Management Council Financial Disclosures and NMFS Procedural Directive 01–116–01 Procedures for Review of Fishery Management Council Financial Disclosures may be obtained at https:// www.fisheries.noaa.gov/national/lawsand-policies/fisheries-managementpolicy-directives. FOR FURTHER INFORMATION CONTACT: Brian Fredieu, 301–427–8505. SUPPLEMENTARY INFORMATION: Section 302 of the Magnuson-Stevens Act (16 U.S.C. 1852) includes provisions for the establishment and administration of the regional fishery management councils (Councils). Section 302(j) (16 U.S.C. 1852(j)) sets forth the statutory requirements for the disclosure of financial interests, and the circumstances under which a Council member is prohibited, or recused, from voting on a matter before a Council. These requirements apply to ‘‘affected individuals.’’ The Magnuson-Stevens Act defines ‘‘affected individual’’ at section 302(j)(1)(A) as individuals who are nominated by the Governor of a State for appointment as a voting member of a Council under section 302(b)(2), and voting members of a Council appointed under section 302(b)(2), or (b)(5) if the individual is not subject to disclosure and recusal requirements under the laws of an Indian tribal government. An affected individual is required to disclose any E:\FR\FM\16NOP1.SGM 16NOP1 57706 Federal Register / Vol. 83, No. 222 / Friday, November 16, 2018 / Proposed Rules tkelley on DSKBCP9HB2PROD with PROPOSALS financial interest in any harvesting, processing, lobbying, advocacy, or marketing activity that is being, or will be, undertaken within a fishery over which the Council concerned has jurisdiction or with respect to an individual or organization with a financial interest in such activity (16 U.S.C. 1852(j)(2)). See also 50 CFR 600.235(a) (further defining ‘‘financial interest in harvesting, processing, lobbying, advocacy, or marketing activity’’). Disclosure is required for the above types of financial interests held by that individual; the individual’s spouse, minor child or partner; or any organization in which the individual is serving as an officer, director, trustee, partner or employee (16 U.S.C. 1852(j)(2)). Regulations implementing the provisions at section 302(j) appear at 50 CFR 600.235. NMFS also has issued policy and procedural directives (see ADDRESSES) to provide additional guidance on the disclosure of financial interests and recusal. Pursuant to section 305(d) of the Magnuson-Stevens Act (16 U.S.C. 1855(d)), this proposed rule would modify the regulations at 50 CFR 600.235 to provide guidance to (1) ensure consistency and transparency in the calculation of an affected individual’s financial interests; (2) determine whether a close causal link exists between a Council decision and a benefit to an affected individual’s financial interest; and (3) establish regional procedures for preparing and issuing recusal determinations. This proposed rule also makes several minor modifications to the regulations governing financial disclosure. The remainder of this preamble provides detailed information on the background and application of the recusal regulations, the issues that have arisen given the lack of regulations addressing certain aspects of recusal, and a detailed description of the regulatory changes being proposed to determine when a voting recusal is required and the process for issuing recusal determinations. Background on the Financial Disclosure and Recusal Regulations at 50 CFR 600.235 In 1986, the Magnuson-Stevens Act, originally called the Fishery Conservation and Management Act, was amended by Public Law 99–659 to require voting members and Executive Directors of each Council to disclose any financial interest they held in harvesting, processing, or marketing of fishery resources under the jurisdiction of their respective Council. With VerDate Sep<11>2014 16:48 Nov 15, 2018 Jkt 247001 passage of the Sustainable Fisheries Act in 1996 (Pub. L. 104–297), Congress amended the Magnuson-Stevens Act to include provisions that prohibit an affected individual from voting on Council decisions that would have a significant and predictable effect on the individual’s disclosed financial interests. Section 302(j)(7) of the Magnuson-Stevens Act (16 U.S.C. 1852(j)(7)) includes a substantive threshold that requires a voting recusal when met, and procedural provisions that apply if an affected individual is prohibited from voting on a Council decision. The substantive threshold requires a voting recusal when a Council decision would have a ‘‘significant and predictable effect’’ on an affected individual’s disclosed financial interests. Section 302(j)(7)(A) states that a council decision is considered to have a ‘‘significant and predictable effect’’ on a financial interest if there is ‘‘a close causal link between the Council decision and an expected and substantially disproportionate benefit to the financial interests of the affected individual relative to the financial interests of other participants in the same gear type or sector of the fishery.’’ The procedural provisions (1) identify a designated official as the person making determinations on whether a Council decision would have a significant and predictable effect on an affected individual’s financial interest (recusal determination), (2) allow a Council member to request the Secretary of Commerce’s (Secretary’s) review of a recusal determination, (3) permit an affected individual who is recused from voting to state how he or she would have voted, and (4) state that any reversal of a recusal determination may not be cause for the invalidation or reconsideration of the Council decision. Section 302(j)(7)(F) requires NMFS to promulgate regulations implementing the provisions of section 302(j)(7). In August 1997, NMFS published a proposed rule to implement the new voting restriction and procedural provisions at section 302(j)(7) (62 FR 42474; August 7, 1997). Most relevant to this proposed rulemaking, NMFS proposed regulations that implemented the Magnuson-Stevens Act’s substantive threshold for recusal and defined the phrase ‘‘expected and substantially disproportionate benefit’’. This definition established a 10 percent interest threshold in either the total harvest, marketing or processing, or ownership of vessels as an indicator of whether an affected individual’s interest in the fishery was significant enough to PO 00000 Frm 00016 Fmt 4702 Sfmt 4702 constitute an expected and substantially disproportionate benefit for purposes of recusal determinations. In the proposed rule preamble, NMFS explained that it interpreted the statutory term ‘‘benefit’’ to include both positive and negative impacts on the affected individual’s financial interests, noting that, ‘‘Avoiding a negative is as advantageous as gaining a positive.’’ NMFS also explained that the choice of a particular percentage as ‘‘indicative of a ‘significant’ interest’’ was a difficult one. NMFS stated that it was considering ‘‘a tiered approach, with different percentage indicators for different-sized sectors of the fishing industry,’’ but that it had been unable to develop a workable model and invited suggestions from the public on dealing with the issue. The proposed regulations also defined the term ‘‘designated official’’ as ‘‘an attorney designated by the NOAA General Counsel’’ and included a process for the issuance and review of recusal determinations. The proposed regulations did not define the term ‘‘Council decision,’’ provide any formula for calculating harvesting, processing, and marketing activity of an affected individual’s financial interests relative to the 10 percent thresholds, or provide any regulatory guidance on how to determine the existence of ‘‘close causal link.’’ NMFS received a number of comments on the proposed rule and published a final rule implementing the voting recusal provisions in November 1998 (63 FR 64182; November 19, 1998). In response to one comment, NMFS added a regulatory definition for the term ‘‘Council decision.’’ Several comments addressed the proposed definition of ‘‘expected and substantially disproportionate benefit.’’ In response to one comment, NMFS explained that the agency had focused on the comparative aspect of the defined term and emphasized that, ‘‘The disqualifying effect is not that the Council action will have a significant impact on the member’s financial interest; the action must have a disproportionate impact as compared with that of other participants in the fishery sector.’’ Additionally, some commenters said the 10 percent thresholds were too high for any fishery; other commenters said the 10 percent thresholds were too low for small fisheries. NMFS maintained the 10 percent thresholds, and responded ‘‘While NMFS has no quantitative data on which to base the selection of 10 percent as the disqualifying industry share, qualitative information available from existing disclosure forms and other E:\FR\FM\16NOP1.SGM 16NOP1 Federal Register / Vol. 83, No. 222 / Friday, November 16, 2018 / Proposed Rules tkelley on DSKBCP9HB2PROD with PROPOSALS sources indicates that this value would accomplish the Congressional intent of disqualifying from voting only those current Council members whose financial interests would be disproportionately affected by Council actions, in comparison with the financial interests of other participants in the fishery sector.’’ NMFS received no comments on, and made no changes in the final rule to address, the calculation of harvesting, processing and marketing activity relative to the 10 percent thresholds or regulatory guidance on determining the existence of ‘‘close causal link.’’ The recusal regulations, located at 50 CFR 600.235, became effective on February 17, 1999. No changes were made to the statutory or regulatory provisions governing financial disclosure and recusal until January 2007, when the Magnuson-Stevens Act was reauthorized (Pub. L. 109–479). The Magnuson-Stevens Reauthorization Act amended section 302(j) to include advocacy and lobbying as types of activities that must be disclosed by affected individuals and to require members of each Council’s Scientific and Statistical Committee to disclose their financial interests. NMFS modified the regulations governing disclosure of financial interests and recusal to address these changes in 2010 (75 FR 59143, September 27, 2010). No further amendments to section 302(j) have occurred since the Magnuson-Stevens Reauthorization Act and NMFS has made no modifications to the financial disclosure and recusal regulations since 2010. Agency Application of the Recusal Regulations Since the effective date of the recusal regulations in February 1999, designated officials within the regional offices of the NOAA Office of General Counsel have followed and applied the recusal regulations and have prepared and issued recusal determinations when requested and as necessary for affected individuals within each of the Councils. However, because the regulations lack guidance on several key aspects of reaching a recusal determination, and provide little guidance on the procedures to be followed when preparing and issuing a recusal determination, designated officials have developed practice principles and interpretations over time to fill in these regulatory gaps and to address new factual circumstances that have arisen. The following describes the current practice, principles, and interpretations that have been used in preparing and issuing recusal determinations, which VerDate Sep<11>2014 16:48 Nov 15, 2018 Jkt 247001 are being either modified or supplemented through this rulemaking. Attribution Principles Without a regulatory formula for calculating harvesting, processing or marketing activity (i.e., covered activity) and vessel ownership relative to the 10 percent thresholds, designated officials have applied a ‘‘full attribution’’ principle. Under the full attribution principle, all covered activity of, and all vessels owned by, a financial interest that is wholly or partially owned by an affected individual are fully attributed to the affected individual. Percentage of ownership has not been a relevant factor under the full attribution principle; the determining factor has been that there is some percentage of ownership in the financial interest. The full attribution principle has also been applied to employment; and to all covered activity of, including all vessels owned by, a financial interest that employs an affected individual. The full attribution principle also extends to financial interests that are wholly or partially owned by an affected individual’s financial interests. A slightly different attribution principle has been applied for financial interests that wholly or partially own an affected individual’s financial interests. A designated official will apply the full attribution principle when a financial interest owns fifty percent or more of an affected individual’s financial interest. However, if a financial interest owns less than fifty percent of an affected individual’s financial interest, then the designated official has not attributed to an affected individual any covered activity of, or vessels owned by, the financial interest. Finally, designated officials have followed certain guidelines in applying attribution principles when the financial interest is an association or organization, or when a spouse, partner, or minor child holds the financial interest. For associations and organizations, designated officials have applied the full attribution principle when the affected individual’s association or organization receives from NMFS an allocation of harvesting or processing privileges, owns vessels, or is directly engaged in a covered activity. However, if the association or organization, as an entity separate from its members, does not own any vessels and is not directly engaged in any covered activity, designated officials have not attributed to the affected individual the covered activity of, or vessel ownership by, the members of the association or organization. For spouses, partners, and minor children, PO 00000 Frm 00017 Fmt 4702 Sfmt 4702 57707 application of the attribution principle depends on whether there is ownership of, or employment with, the financial interest. Designated officials apply the full attribution principle and attribute to an affected individual all covered activity of, and vessels owned by, a financial interest that is wholly or partially owned by a spouse, partner, or minor child. Similarly, designated officials have applied the full attribution principle and attributed to an affected individual all covered activity of, and vessels owned by, a financial interest that employs a spouse, partner or minor child when the spouse’s, partner’s, or minor child’s compensation is influenced by, or fluctuates with, the financial performance of the company. Conversely, designated officials have not attributed to an affected individual any covered activity of, or vessels owned by, a financial interest that employs a spouse, partner or minor child when the spouse’s, partner’s, or minor child’s compensation is not influenced by, or fluctuates with, the financial performance of the company. Close Causal Link Since implementation of the recusal regulations in 1999, designated officials have understood that the MagnusonStevens Act and the regulations require a voting recusal when there is a close causal link between the Council decision and an expected and substantially disproportionate benefit to an affected individual’s financial interest in the fishery or sector of the fishery affected by the Council decision relative to other participants and using the most recent fishing year for which information is available. However, without any regulatory guidance concerning the close causal link requirement, the issue has sometimes been subsumed in the determination of whether there is an expected and substantially disproportionate benefit. Process and Procedure for Preparing and Issuing Recusal Determinations Regulations at 50 CFR 600.235(f) set forth two paths for initiating a recusal determination. First, an affected individual may request a recusal determination by notifying the designated official either within a reasonable time before the Council meeting at which the Council decision will be made or during a Council meeting before a Council vote on the decision. Second, a designated official may initiate a recusal determination. The designated official may initiate based on his or her knowledge of the fishery and the financial interests disclosed by an affected individual or E:\FR\FM\16NOP1.SGM 16NOP1 57708 Federal Register / Vol. 83, No. 222 / Friday, November 16, 2018 / Proposed Rules tkelley on DSKBCP9HB2PROD with PROPOSALS based on written and signed information received either within a reasonable time before a Council meeting or, if the issue could not have been anticipated before the meeting, during a Council meeting before a Council vote on the decision. Regulations at § 600.235(f) also state that the recusal determination will be based upon a review of the information contained in the affected individual’s financial interest form and any other reliable and probative information provided in writing and that all information considered will be made part of the public record for the decision. While the regulations at § 600.235(f) provide some structure for the initiation, development, and issuance of a recusal determination, they are silent on other important procedural aspects of preparing and issuing a recusal determination. For example, the regulations do not address: (1) The process by which the designated official will make the affected individual, the Council, and the public aware of recusal determinations, (2) how and when designated officials are identified, or (3) the timing of issuing a recusal determination relative to the start of a Council meeting and the request for review process. Without additional regulatory guidance concerning the procedure for preparing and issuing recusal determinations, regional practices have developed to address these gaps. Concerns With the Recusal Regulations and Need for Action Several recent determinations resulting in voting recusals have raised concerns among the Regional Fishery Management Councils. In April 2015, the NOAA General Counsel received a request for review (i.e., appeal) of a recusal determination issued in March 2015 that concluded that a voting recusal was required for an affected individual on the North Pacific Council. The appeal challenged the use of the full attribution approach and argued that the regulations and common business practices support using a proportional share, or partial attribution, approach to calculating financial interests. Under such an approach, an affected individual would be attributed with covered activity and vessel ownership commensurate with the affected individual’s percentage of ownership in the company. The appeal noted that the language of the regulations refers to the interests of the affected individual and explained that if an affected individual owns five percent of a fishing company, then the affected individual only receives five percent of VerDate Sep<11>2014 16:48 Nov 15, 2018 Jkt 247001 the company distributions because the affected individual does not have a financial interest in more than five percent of the company. According to the appeal, to attribute all activity of a partially-owned company unreasonably credits the affected individual with more of the financial interest than is actually owned. The appeal also argued that in an employment situation, the affected individual should only be attributed with a proportional share of the harvesting and processing activity of companies that are partially-owned subsidiary companies of the affected individual’s employer. After reviewing the appeal, the NOAA General Counsel upheld the use of the full attribution approach, concluding that (1) the term ‘‘interest’’ as used in the recusal regulations is broad and not limited solely to direct financial benefit from harvest; (2) that the full attribution approach is more consistent with the purpose of the Magnuson-Stevens Act and the regulations; and (3) while past practice is not necessarily binding, consistency and predictability are important for all stakeholders in the fisheries management process. After receiving another recusal determination in May 2015 that used the full attribution approach, the North Pacific Council submitted a letter to NMFS in August 2015, asking NMFS to consider changes to the way in which covered activity is calculated. Specifically, the North Pacific Council asked NMFS to consider using a proportional share approach similar to the approach described in the appeal. Under the approach, the designated official would attribute to the affected individual the percentage of the company’s covered activity that is commensurate with the affected individual’s ownership percentage. The North Pacific Council argued that use of the full attribution approach is an ‘‘unfair and illogical interpretation of the recusal regulations, and results in unintended recusals of Council members.’’ The North Pacific Council also stated that it had general concerns with the lack of transparency and predictability of the recusal process and asked that NMFS provide more clarity and predictability to the process of issuing recusal determinations. While NMFS was considering the North Pacific Council’s requests, another determination requiring a voting recusal of an affected individual of the North Pacific Council was issued in March 2017. The recusal determination applied the full attribution approach and determined that a voting recusal was required because the action before the North PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 Pacific Council was a Council decision and the affected individual’s financial interests harvested more than ten percent of the total harvest in the affected fishery during the previous fishing year. However, the Council decision was a fishery management plan amendment that required no implementing regulations. The North Pacific Council argued that because the action had no real possibility of affecting the affected individual’s financial interests, there was no close causal link between the Council decision and the expected and substantially disproportionate benefit to the affected individual’s financial interests and no voting recusal should have been required. Around this same time, the Western Pacific Council raised similar concerns with regard to ‘‘close causal link’’ between a benefit and a Council decision, and what constituted an ‘‘expected and substantially disproportionate benefit’’ regarding an affected individual’s financial interest, especially when the affected individual is an employee of a fishing company versus an owner of a fishing company. NMFS discussed these concerns with the Council Coordination Committee and decided to initiate this rulemaking to address the concerns. NMFS tasked a recusal working group, comprised of experts in both NMFS and the NOAA Office of General Counsel, to consider whether the agency should take any action regarding how the recusal provisions should be applied in such circumstances in the future. The group considered the attribution principles for recusal determinations and sought solutions to clarify the application of the close causal link requirement in the Magnuson-Stevens Act. The group also discussed ways in which to improve the transparency of regional procedures employed in preparing and issuing recusal determinations. Proposed Changes to the Financial Disclosure and Recusal Regulations NMFS proposes to make the following changes to the financial disclosure and recusal regulations at § 600.235. Decision-Making Process for Recusal Determinations NMFS proposes regulations that explain the steps to be followed in determining whether an affected individual is required to be recused from voting. Regulations at 50 CFR 600.235(c)(3) would be modified to clarify the multi-part test that is used in making this determination. First, the designated official would need to determine if the action being taken by a Council is a ‘‘Council decision’’ and E:\FR\FM\16NOP1.SGM 16NOP1 Federal Register / Vol. 83, No. 222 / Friday, November 16, 2018 / Proposed Rules tkelley on DSKBCP9HB2PROD with PROPOSALS whether an affected individual (i.e., member, spouse, partner, minor child) had an interest in the fishery affected by the Council decision. If the action before the Council is not a ‘‘Council decision’’ or no affected individuals have any financial interests in the fishery affected by the decision, the designated official’s inquiry would end. But if the answer to these factors is yes, the designated official would then need to examine the next two factors: Whether there is an expected and substantially disproportionate benefit to the affected individual’s financial interests and whether there is a close causal link between the Council decision and the expected and substantially disproportionate benefit. Under the proposed rule, a designated official would be able to decide the order in which these factors are examined. If the answer to either of these factors is no, then the designated official’s inquiry would end and a voting recusal would not be required. But if the answer to both of these factors is yes, then a voting recusal would be required. Expected and Substantially Disproportionate Benefit NMFS proposes to make minor adjustments to the current regulatory definition of ‘‘expected and substantially disproportionate benefit.’’ One of these changes would be to remove the ten percent recusal thresholds from the definition of ‘‘expected and substantially disproportionate benefit’’ and use them to define the term ‘‘significant financial interest.’’ NMFS also proposes to add § 600.235(c)(5) to provide guidance on determining whether an expected and substantially disproportionate benefit exists. This proposed regulation clarifies that an expected and substantially disproportionate benefit will be determined to exist if an affected individual has a significant financial interest in the fishery that is likely to be positively or negatively impacted by the Council decision. An affected individual’s significant financial interest in a fishery indicates that the affected individual will experience an expected and substantially disproportionate impact, either positive or negative, relative to the financial interests of other participants in the fishery. The magnitude of the positive or negative impact is not determinative of whether there is an expected and substantially disproportionate benefit. NMFS also proposes regulatory guidance on how to calculate an affected individual’s financial interests in order to determine whether the VerDate Sep<11>2014 16:48 Nov 15, 2018 Jkt 247001 affected individual has a significant financial interest, which is described later in the preamble. Close Causal Link NMFS proposes to create a definition of close causal link to better guide the application of the requirement for causation between a Council decision and an expected and substantially disproportionate benefit to the financial interests of an affected individual. The proposed definition would state that a close causal link means that ‘‘a Council decision would reasonably be expected to directly impact or affect the financial interests of an affected individual.’’ NMFS also proposes regulatory guidance on determining whether a close causal link exists. Due to the nature of Council decisions, NMFS concluded that it generally is likely that a close causal link between a benefit and a Council decision exists for all Council decisions, especially those with implementing regulations, as regulations typically impact the public directly in some way. However, NMFS also recognizes that there may be instances where no impact would occur or where the chain of causation is attenuated. Therefore, NMFS proposes exceptions under which a designated official may determine that a close causal link does not exist. One proposed exception would be for a Council decision affecting a fishery or sector of a fishery in which an affected individual has a financial interest but the chain of causation between the Council decision and the affected individual’s financial interest is attenuated or is contingent on the occurrence of events that are speculative or that are independent and unrelated to the Council decision. The other proposed exception would be for a Council decision affecting a fishery or sector of a fishery in which an affected individual has a financial interest but there is no real, as opposed to speculative, possibility that the Council decision will affect the affected individual’s financial interest. This proposed language provides guidance on how to determine an element of causation in those instances where a Council decision is not reasonably expected to directly impact or affect the financial interest of an affected individual. Calculating Significant Financial Interest In response to the requests for increased transparency and predictability, NMFS proposes to amend the regulations to provide guidance on the attribution principles to be applied PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 57709 when calculating whether an affected individual has a significant financial interest in a fishery. The proposed attribution principles address (1) direct ownership and employment, (2) indirect ownership, (3) parent ownership, (4) financial interests in associations and organizations, and (5) financial interests of a spouse, partner, or minor child. The proposed attribution principles for parent ownership, associations and organizations, and financial interests of a spouse, partner, or minor child represent the approach NMFS has been following and would continue to follow if this proposed rule is finalized. However, NMFS proposes to adopt a partial attribution approach when calculating direct and indirect ownership. NMFS recognizes a distinction between two different types of partial interest: (1) Direct ownership, and (2) indirect ownership (i.e., a subsidiary relationship). A direct ownership interest exists where a council member (or the member’s employer) directly owns some interest—whether full ownership or some share—in a particular company. An indirect or subsidiary ownership interest exists where a company in which the council member (or the member’s employer) has a direct interest owns a share of another company. NMFS believes the direct and indirect ownership situations should be distinguished because an individual has a direct interest in, and more control over, a company that he or she owns, even if the interest represents a partial interest in the company. On the other hand, an individual’s indirect ownership interest in a subsidiary company is more attenuated. Note also that in some cases employees are treated differently than owners because an employee cannot be ‘‘partially’’ employed by a company. An affected individual would be considered to have a direct ownership interest when the affected individual wholly or partially owns, or is employed by, a business, vessel, or other entity (i.e., company) reported on the individual’s financial interest form. For direct ownership, NMFS proposes that a designated official fully attribute to an affected individual all covered activity and vessel ownership of a company when the affected individual is employed by, or owns 50 percent or more of, the company. If the affected individual owns less than 50 percent of the company, NMFS proposes that a designated official attribute covered activity and vessel ownership commensurate with the affected individual’s percentage of ownership. E:\FR\FM\16NOP1.SGM 16NOP1 tkelley on DSKBCP9HB2PROD with PROPOSALS 57710 Federal Register / Vol. 83, No. 222 / Friday, November 16, 2018 / Proposed Rules In the case of direct ownership, NMFS determined that affected individuals owning 50 percent or more of a company should continue to be attributed with 100 percent of the covered activity and vessel ownership of that company because an individual has a direct interest in, and more control over, a company that he or she owns, even if the interest represents less than a 100 percent interest in the company. NMFS believes that when a Council member owns a controlling interest in a company, the member can also control a company’s response to any particular council decision and the potential for a conflict of interest is heightened. Additionally, NMFS determined that an employee of a company should continue to be attributed with 100 percent of the covered activity and vessel ownership of that company because an employee cannot be ‘‘partially’’ employed and thus the employee’s interest is always fully attributed to a company through the nature of their employment. However, NMFS determined that a partial attribution approach for less than 50 percent direct ownership would more closely align the owner’s actual ownership interest in a company and better reflect the ability to control the company’s activities. Therefore NMFS proposes to only attribute the proportional level of interest to the owner. In the case of indirect (or subsidiary) ownership, an affected individual would be considered to have an indirect ownership interest when the affected individual’s company or employer wholly or partially owns a company that must be reported on the individual’s financial interest form. For subsidiary ownership, NMFS proposes to apply a partial attribution approach and attribute to the affected individual the harvesting, processing, and marketing activity of, and vessels owned by, a company that is owned by an affected individual’s company or employer commensurate with the member’s percentage ownership in the directly owned company, and the directly owned company’s ownership in the indirectly owned company. For example, if Jones owns 25 percent of Acme, and Acme owns 50 percent of Zenith, then Jones should be attributed 12.5 percent of Zenith’s activity in an affected fishery. NMFS determined that this partial attribution approach better captures the attenuated nature of indirect ownership and reflects that an affected individual has less control or a more partial interest in the activities of a company indirectly owned by the affected individual’s directly owned VerDate Sep<11>2014 16:48 Nov 15, 2018 Jkt 247001 company or employer. In any of these cases, the burden would be on the Council member to provide reliable information concerning partial ownership interests. In the absence of such information, a 100 percent interest would be assumed. NMFS recognizes that the proposed revisions to the direct and indirect attribution principles may not address every situation in which an affected individual’s interest may seem attenuated. However, under the proposed multi-part test for determining whether recusal is required, a designated official must specifically determine whether there is a close causal link between a council decision and an expected and substantially disproportionate benefit to an affected individual’s financial interests. The proposed guidance on close causal link will further address situations where an affected individual’s interest is attenuated from a Council decision. Process for Development and Issuance of Recusal Determinations In order to increase transparency and to add clarity to the process for development and issuance of recusal determinations, NMFS intends to require that each NMFS Regional Office, in conjunction with NOAA Office of General Counsel, will publish and make available to the public a Regional Recusal Determination Procedure Handbook, which explains the process and procedure typically followed by the region in preparing and issuing recusal determinations. The handbook would include: A statement that the Regional Recusal Determination Procedure Handbook is intended as guidance to describe the recusal determination process and procedure typically followed within the region; identification of the Council(s) to which the Regional Recusal Determination Procedure Handbook applies; a description of the process for identifying the fishery or sector of the fishery affected by the action before the Council; a description of the process for preparing and issuing a recusal determination relative to the timing of a Council decision; a description of the process by which the Council, Council members, and the public will be made aware of recusal determinations; and a description of the process for identifying the designated official(s) who will prepare recusal determinations and attend Council meetings. Other Proposed Changes In addition to the proposed changes described above, NMFS proposes to make several minor changes to section PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 600.235 to provide additional clarity to the financial disclosure regulations and guidance concerning the length of time Regional Administrators and NMFS Regional Offices must retain financial disclosure forms submitted by Council and Scientific and Statistical Committee (SSC) members. First, NMFS proposes to amend the heading for section 600.235 to include reference to recusal. The current heading for section 600.235 only refers to financial disclosure but this section has included the recusal regulations since 1998. The addition of ‘‘recusal’’ to the heading would provide clarity as to the subject of the regulations at section 600.235. Second, the proposed rule would modify regulations at 600.235(h) to change ‘‘financial disclosure report’’ to ‘‘Financial Interest Form’’ to provide the accurate title of the financial disclosure form when it is referenced in the regulations. The proposed modifications would provide clarity and consistency in the financial disclosure regulations by including an accurate reference to the financial disclosure form. Third, the proposed rule would add a new paragraph 600.235(b)(5), which would require a Regional Administrator to retain a Council member’s financial disclosure forms for 20 years from the date the form is signed by the Council member, or in accordance with the records retention schedule published by the National Archives and Records Administration (NARA), and as implemented by NOAA, if the schedule requires retention of such forms for longer than 20 years. Currently, the financial disclosure regulations do not provide Regional Administrators or NMFS Regional Offices with any guidance on the length of time a Council member’s financial disclosure forms should be retained by NMFS. NMFS has determined that financial disclosure forms submitted by Council members are important documents worthy of retention for 20 years after their submission, or for as long as required by NARA. The proposed change would ensure that a Council member’s financial disclosure forms are available for public inspection and agency examination for a sufficient period of time during and following the Council member’s tenure on a regional fishery management council. Finally, the proposed rule would make minor clarifying changes through proposed § 600.235(b)(8) by changing the phrase ‘‘shall maintain on file’’ to ‘‘must retain.’’ Classification The NMFS Assistant Administrator has determined that the proposed rule is E:\FR\FM\16NOP1.SGM 16NOP1 tkelley on DSKBCP9HB2PROD with PROPOSALS Federal Register / Vol. 83, No. 222 / Friday, November 16, 2018 / Proposed Rules consistent with the Magnuson-Stevens Act, and other applicable law, subject to further consideration after public comment. This proposed action is significant for the purposes of Executive Order 12866. The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities. This rule regulates only those Council members who have voting privileges and are appointed to their position by the Secretary of Commerce. This proposed rule would modify regulations at 50 CFR 600.235 to provide guidance to: (1) Ensure consistency and transparency in the calculation of an affected individual’s financial interests; (2) determine whether a close causal link exists between a Council decision and a benefit to an affected individual’s financial interest; and (3) establish regional procedures for preparing and issuing recusal determinations. NMFS invites public comment on whether the changes proposed are sufficient and effective in distinguishing the calculation of direct ownership, indirect ownership and employment interests; whether the proposed language appropriately defines when a close causal link exists between a Council decision and a benefit; and whether the establishment of regional procedures provides consistency and transparency in the preparation and issuance of recusal determinations. Specifically, NMFS invites public comment on whether partial attribution should extend to cases where the affected individual is an employee, a member of an association or organization, a spouse, partner, or minor child of a council member, or in cases of parent ownership; on whether there are additional circumstances that merit an exception from the standard that a close causal link exists for all Council decision that require implementing regulations and that affect a fishery or sector of a fishery in which an affect individual has a financial interest; whether partial attribution appropriately reflects the attenuated nature of indirect ownership. NMFS also invites comment on whether a 50 percent ownership threshold captures the nature of direct ownership, including whether an interest of less than 50 percent might in some cases be controlling, but also notes that any subjective control test would likely require council members to submit additional financial information and VerDate Sep<11>2014 16:48 Nov 15, 2018 Jkt 247001 would require NMFS to develop a process and expertise to analyze control. In accordance with 50 CFR 600.235, Council members may be required to recuse themselves from voting on a Council decision that would have a significant and predictable effect on a disclosed financial interest. This proposed rule would have no effect on any small entities, as defined under the Regulatory Flexibility Act, 5 U.S.C. 601. As a result, an initial regulatory flexibility analysis is not required and none has been prepared. List of Subjects in 50 CFR Part 600 Administrative practice and procedure, Confidential business information, Fisheries, Fishing, Fishing vessels, Foreign relations, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Statistics. Dated: November 8, 2018. Samuel D. Rauch III, Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service. For reasons set out in the preamble, NMFS proposes to amend 50 CFR part 600 as follows: PART 600—MAGNUSON-STEVENS ACT PROVISIONS 1. The authority citation for part 600 continues to read as follows: ■ Authority: 5 U.S.C. 561 and 16 U.S.C. 1801 et seq. 2. In § 600.235: a. Revise the section heading; b. In paragraph (a) add in alphabetical order the definitions for ‘‘Close causal link,’’ ‘‘Expected and substantially disproportionate benefit,’’ and ‘‘Significant financial interest;’’ ■ c. Redesignate paragraphs (b)(5) through (b)(7) as paragraphs (b)(6) through (b)(8), respectively, add new paragraph (b)(5), and revise newly redesignated paragraph (b)(8); ■ d. Revise paragraph (c)(3), redesignate paragraph (c)(4) as (c)(7), and add new paragraphs (c)(4), (c)(5), and (c)(6); ■ e. Revise the heading of paragraph (f), (f)(1), and add paragraph (f)(6); ■ f. Revise paragraphs (g)(2) and (h). The additions and revisions to read as follows: ■ ■ ■ § 600.235 recusal. Financial disclosure and (a) * * * Close causal link means that a Council decision would reasonably be expected to directly impact or affect the financial interests of an affected individual. * * * * * PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 57711 Expected and substantially disproportionate benefit means a positive or negative impact with regard to a Council decision that is likely to affect a fishery or sector of a fishery in which the affected individual has a significant financial interest. * * * * * Significant financial interest means: (1) A greater than 10-percent interest in the total harvest of the fishery or sector of the fishery affected by the Council decision; (2) A greater than 10-percent interest in the marketing or processing of the total harvest of the fishery or sector of the fishery affected by the Council decision; or (3) Full or partial ownership of more than 10 percent of the vessels using the same gear type within the fishery or sector of the fishery affected by the Council decision. (b) * * * (5) The Regional Administrator must retain the Financial Interest Form for a Council member for 20 years from the date the form is signed by the Council member or in accordance with the current NOAA records schedule. * * * * * (8) The Regional Administrator must retain the Financial Interest Forms of all SSC members for at least five years after the expiration of that individual’s term on the SSC. Such forms are not subject to sections 302(j)(5)(B) and (C) of the Magnuson-Stevens Act. (c) * * * (3) In making a determination under paragraph (f) of this section as to whether a Council decision will have a significant and predictable effect on an affected individual’s financial interests, the designated official will: (i) Initially determine whether the action before the Council is a Council decision, and whether the affected individual has any financial interest in the fishery or sector of the fishery affected by the action. (ii) If the designated official determines that the action is not a Council decision or that the affected individual does not have any financial interest in the fishery or sector of the fishery affected by the action, the designated official’s inquiry ends and the designated official will determine that a voting recusal is not required under 50 CFR 600.235. (iii) However, if the designated official determines that the action is a Council decision and that the affected individual has a financial interest in the fishery or sector of the fishery affected by the Council decision, a voting recusal is required under 50 CFR 600.235 if there is: E:\FR\FM\16NOP1.SGM 16NOP1 tkelley on DSKBCP9HB2PROD with PROPOSALS 57712 Federal Register / Vol. 83, No. 222 / Friday, November 16, 2018 / Proposed Rules (A) An expected and substantially disproportionate benefit to the affected individual’s financial interest (see paragraph (c)(5) of this section), and (B) A close causal link (see paragraph (c)(4) of this section) between the Council decision and the expected and substantially disproportionate benefit to the affected individual’s financial interest. (4) Determining close causal link. (i) For all Council decisions that require implementing regulations and that affect a fishery or sector of a fishery in which an affected individual has a financial interest, a close causal link exists unless: (A) The chain of causation between the Council decision and the affected individual’s financial interest is attenuated or is contingent on the occurrence of events that are speculative or that are independent of and unrelated to the Council decision; or (B) There is no real, as opposed to speculative, possibility that the Council decision will affect the affected individual’s financial interest. (ii) For Council decisions that do not require implementing regulations, a close causal link exists if there is a real, as opposed to speculative, possibility that the Council decision will affect the affected individual’s financial interest. (5) Determining expected and substantially disproportionate benefit. A designated official will determine that an expected and substantially disproportionate benefit exists if an affected individual has a significant financial interest (see paragraph (c)(6) of this section) in the fishery or sector of the fishery that is likely to be positively or negatively affected by the Council decision. The magnitude of the positive or negative impact is not determinative of whether there is an expected and substantially disproportionate benefit. The determining factor is the affected individual’s significant financial interest in the fishery or sector of the fishery affected by the Council decision. (6) Calculating significant financial interest—(i) Information to be used. (A) The designated official will use the information included in the Financial Interest Form and any other reliable and probative information provided in writing. (B) The designated official may contact an affected individual to better understand the reported financial interest or any information provided in writing. (C) The designated official will presume that the information reported on the Financial Interest Form is true and correct and the designated official is not responsible for determining the VerDate Sep<11>2014 16:48 Nov 15, 2018 Jkt 247001 veracity of the reported information when preparing a determination under paragraph (f) of this section. (D) If an affected individual does not provide information concerning the specific percentage of ownership of a financial interest reported on his or her Financial Interest Form, the designated official will attribute all harvesting, processing, or marketing activity of, and vessels owned by, the financial interest to the affected individual. (ii) Attribution principles to be applied when calculating an affected individual’s financial interests relative to the significant financial interest thresholds. The designated official will apply the following principles when calculating an affected individual’s financial interests relative to the significant financial interest thresholds for the fishery or sector of the fishery affected by the action. For purposes of this paragraph, use of the term ‘‘company’’ includes any business, vessel, or other entity. (A) Direct ownership (companies owned by, or that employ, an affected individual). The designated official will attribute to an affected individual all harvesting, processing, and marketing activity of, and all vessels owned by, a company when the affected individual owns 50 percent or more of that company. If an affected individual owns less than 50 percent of a company, the designated official will attribute to the affected individual the harvesting, processing, and marketing activity of, and vessels owned by, the company commensurate with the affected individual’s percentage of ownership. The designated official will attribute to an affected individual all harvesting, processing, and marketing activity of, and all vessels owned by, a company that employs the affected individual. (B) Indirect ownership (companies owned by an affected individual’s company or employer). The designated official will attribute to the affected individual the harvesting, processing, and marketing activity of, and vessels owned by, a company that is owned by that affected individual’s company or employer commensurate with the affected individual’s percentage ownership in the directly owned company, and the directly owned company’s ownership in the indirectly owned company. (C) Parent ownership (companies that own some percentage of an affected individual’s company or employer). The designated official will attribute to an affected individual all harvesting, processing, and marketing activity of, and all vessels owned by, a company that owns fifty percent or more of a PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 company that is owned by the affected individual or that employs the affected individual. The designated official will not attribute to an affected individual the harvesting, processing, or marketing activity of, or any vessels owned by, a company that owns less than fifty percent of a company that is owned by the affected individual or that employs the affected individual. (D) Associations and Organizations. An affected individual may be employed by or serve, either compensated or unpaid, as an officer, director, board member or trustee of an association or organization. The designated official will not attribute to the affected individual the vessels owned by, or the harvesting, processing, or marketing activity conducted by, the members of that association or organization if such organization or association, as an entity separate from its members, does not own any vessels and is not directly engaged in harvesting, processing or marketing. However, if such organization or association receives from NMFS an allocation of harvesting or processing privileges, owns vessels, or is directly engaged in harvesting, processing or marketing, the designated official will attribute to the affected individual the vessels owned by, and all harvesting, processing, and marketing activity of, that association or organization. (E) Financial interests of a spouse, partner or minor child—(1) Ownership. The designated official will attribute to an affected individual all harvesting, processing, and marketing activity of, and all vessels owned by, a company when the affected individual’s spouse, partner or minor child owns 50 percent or more of that company. If an affected individual’s spouse, partner or minor child owns less than 50 percent of a company, the designated official will attribute to the affected individual the harvesting, processing, and marketing activity of, and vessels owned by, the company commensurate with the spouse’s, partner’s or minor child’s percentage of ownership. (2) Employment. The designated official will not attribute to an affected individual the harvesting, processing, or marketing activity of, or any vessels owned by, a company that employs the affected individual’s spouse, partner or minor child when the spouse’s, partner’s or minor child’s compensation are not influenced by, or fluctuate with, the financial performance of the company. The designated official will attribute to an affected individual all harvesting, processing, and marketing activity of, and all vessels owned by, a company that employs the Council E:\FR\FM\16NOP1.SGM 16NOP1 Federal Register / Vol. 83, No. 222 / Friday, November 16, 2018 / Proposed Rules tkelley on DSKBCP9HB2PROD with PROPOSALS member’s spouse, partner or minor child when the spouse’s, partner’s or minor child’s compensation are influenced by, or fluctuate with, the financial performance of the company. * * * * * (f) Process and procedure for determination. (1) At the request of an affected individual, and as provided under paragraphs (c)(3) through (6), the designated official shall determine for the record whether a Council decision would have a significant and predictable effect on that individual’s financial interest. Unless subject to confidentiality requirements, all information considered will be made part of the public record for the decision. The affected individual may request a determination by notifying the designated official— (i) Within a reasonable time before the Council meeting at which the Council decision will be made; or (ii) During a Council meeting before a Council vote on the decision. * * * * * (6) Regional Recusal Determination Procedure Handbook. (i) Each NMFS Regional Office, in conjunction with NOAA Office of General Counsel, will publish and make available to the public its Regional Recusal Determination Procedure Handbook, which explains the process and procedure typically followed in preparing and issuing recusal determinations. (ii) A Regional Recusal Determination Procedure Handbook must include: VerDate Sep<11>2014 16:48 Nov 15, 2018 Jkt 247001 (A) A statement that the Regional Recusal Determination Procedure Handbook is intended as guidance to describe the recusal determination process and procedure typically followed within the region. (B) Identification of the Council(s) to which the Regional Recusal Determination Procedure Handbook applies. If the Regional Recusal Determination Procedure Handbook applies to multiple Councils, any procedure that applies to a subset of those Councils should clearly identify the Council(s) to which the procedure applies. (C) A description of the process for identifying the fishery or sector of the fishery affected by the action before the Council. (D) A description of the process for preparing and issuing a recusal determination relative to the timing of a Council decision. (E) A description of the process by which the Council, Council members, and the public will be made aware of recusal determinations. (F) A description of the process for identifying the designated official(s) who will prepare recusal determinations and attend Council meetings. (iii) A Regional Recusal Determination Procedure Handbook may include additional material related to the region’s process and procedure for recusal determinations not specifically identified in paragraph (f)(6)(ii) of this section. A Regional Recusal Determination Procedure Handbook may be revised at any time upon agreement by the NMFS Regional PO 00000 Frm 00023 Fmt 4702 Sfmt 9990 57713 Office and NOAA Office of General Counsel. (g) * * * (2) A Council member may request a review of any aspect of the recusal determination, including but not limited to, whether the action is a Council decision, the description of the fishery or sector of the fishery affected by the Council action, the calculation of an affected individual’s financial interests or the finding of a significant financial interest, and the existence of a close causal link. A request for review must include a full statement in support of the review, including a concise statement as to why the Council member believes that the recusal determination is in error and why the designated official’s determination should be reversed. * * * * * (h) The provisions of 18 U.S.C. 208 regarding conflicts of interest do not apply to an affected individual who is a voting member of a Council appointed by the Secretary, as described under section 302(j)(1)(A)(ii) of the MagnusonStevens Act, and who is in compliance with the requirements of this section for filing a Financial Interest Form. The provisions of 18 U.S.C. 208 do not apply to a member of an SSC, unless that individual is an officer or employee of the United States or is otherwise covered by the requirements of 18 U.S.C. 208. * * * * * [FR Doc. 2018–24905 Filed 11–15–18; 8:45 am] BILLING CODE 3510–22–P E:\FR\FM\16NOP1.SGM 16NOP1
[Federal Register Volume 83, Number 222 (Friday, November 16, 2018)]
[Pages 57705-57713]
[FR Doc No: 2018-24905]
[Docket No. 180212158-8158-01]
RIN 0648-BH73
Provisions; Regional Fishery Management Council Membership; Financial
SUMMARY: NMFS proposes changes to the regulations that address
disclosure of financial interests by, and voting recusal of, council
members appointed by the Secretary of Commerce (Secretary) to the
regional fishery management councils established under the Magnuson-
Stevens Fishery Conservation and Management Act. The regulatory changes
are needed to provide guidance to ensure consistency and transparency
in the calculation of a Council member's financial interests; determine
whether a close causal link exists between a Council decision and a
benefit to a Council member's financial interest; and establish
regional procedures for preparing and issuing recusal determinations.
This proposed rule is intended to improve regulations implementing the
statutory requirements governing disclosure of financial interests and
voting recusal at section 302(j) of the Magnuson-Stevens Fishery
DATES: Written comments must be received on or before March 6, 2019.
Docket Number NOAA-NMFS-2018-0092, by any of the following methods:
www.regulations.gov/#!docketDetail;D=NOAA-NMFS-2018-0092, click the
Mail: Submit written comments to Alan Risenhoover,
Service, 1315 East-West Highway, SSMC3, Silver Spring, MD 20910. Please
mark the outside of the envelope ``Financial Disclosure/Recusal.''
information (for example, name, address, etc.) submitted voluntarily by
Electronic copies of NMFS Policy Directive 01-116 Fishery
Management Council Financial Disclosures and NMFS Procedural Directive
01-116-01 Procedures for Review of Fishery Management Council Financial
Disclosures may be obtained at https://www.fisheries.noaa.gov/national/laws-and-policies/fisheries-management-policy-directives.
FOR FURTHER INFORMATION CONTACT: Brian Fredieu, 301-427-8505.
SUPPLEMENTARY INFORMATION: Section 302 of the Magnuson-Stevens Act (16
U.S.C. 1852) includes provisions for the establishment and
administration of the regional fishery management councils (Councils).
Section 302(j) (16 U.S.C. 1852(j)) sets forth the statutory
requirements for the disclosure of financial interests, and the
circumstances under which a Council member is prohibited, or recused,
from voting on a matter before a Council. These requirements apply to
``affected individuals.'' The Magnuson-Stevens Act defines ``affected
individual'' at section 302(j)(1)(A) as individuals who are nominated
by the Governor of a State for appointment as a voting member of a
Council under section 302(b)(2), and voting members of a Council
appointed under section 302(b)(2), or (b)(5) if the individual is not
subject to disclosure and recusal requirements under the laws of an
Indian tribal government. An affected individual is required to
financial interest in any harvesting, processing, lobbying, advocacy,
or marketing activity that is being, or will be, undertaken within a
fishery over which the Council concerned has jurisdiction or with
respect to an individual or organization with a financial interest in
such activity (16 U.S.C. 1852(j)(2)). See also 50 CFR 600.235(a)
(further defining ``financial interest in harvesting, processing,
lobbying, advocacy, or marketing activity''). Disclosure is required
for the above types of financial interests held by that individual; the
individual's spouse, minor child or partner; or any organization in
which the individual is serving as an officer, director, trustee,
partner or employee (16 U.S.C. 1852(j)(2)).
Regulations implementing the provisions at section 302(j) appear at
50 CFR 600.235. NMFS also has issued policy and procedural directives
(see ADDRESSES) to provide additional guidance on the disclosure of
financial interests and recusal.
Pursuant to section 305(d) of the Magnuson-Stevens Act (16 U.S.C.
1855(d)), this proposed rule would modify the regulations at 50 CFR
600.235 to provide guidance to (1) ensure consistency and transparency
in the calculation of an affected individual's financial interests; (2)
determine whether a close causal link exists between a Council decision
and a benefit to an affected individual's financial interest; and (3)
establish regional procedures for preparing and issuing recusal
determinations. This proposed rule also makes several minor
modifications to the regulations governing financial disclosure. The
remainder of this preamble provides detailed information on the
background and application of the recusal regulations, the issues that
have arisen given the lack of regulations addressing certain aspects of
recusal, and a detailed description of the regulatory changes being
proposed to determine when a voting recusal is required and the process
for issuing recusal determinations.
Background on the Financial Disclosure and Recusal Regulations at 50
CFR 600.235
In 1986, the Magnuson-Stevens Act, originally called the Fishery
Conservation and Management Act, was amended by Public Law 99-659 to
require voting members and Executive Directors of each Council to
disclose any financial interest they held in harvesting, processing, or
marketing of fishery resources under the jurisdiction of their
respective Council. With passage of the Sustainable Fisheries Act in
1996 (Pub. L. 104-297), Congress amended the Magnuson-Stevens Act to
include provisions that prohibit an affected individual from voting on
Council decisions that would have a significant and predictable effect
on the individual's disclosed financial interests. Section 302(j)(7) of
the Magnuson-Stevens Act (16 U.S.C. 1852(j)(7)) includes a substantive
threshold that requires a voting recusal when met, and procedural
provisions that apply if an affected individual is prohibited from
voting on a Council decision. The substantive threshold requires a
voting recusal when a Council decision would have a ``significant and
predictable effect'' on an affected individual's disclosed financial
interests. Section 302(j)(7)(A) states that a council decision is
considered to have a ``significant and predictable effect'' on a
financial interest if there is ``a close causal link between the
Council decision and an expected and substantially disproportionate
benefit to the financial interests of the affected individual relative
to the financial interests of other participants in the same gear type
or sector of the fishery.'' The procedural provisions (1) identify a
designated official as the person making determinations on whether a
Council decision would have a significant and predictable effect on an
affected individual's financial interest (recusal determination), (2)
allow a Council member to request the Secretary of Commerce's
(Secretary's) review of a recusal determination, (3) permit an affected
individual who is recused from voting to state how he or she would have
voted, and (4) state that any reversal of a recusal determination may
not be cause for the invalidation or reconsideration of the Council
decision. Section 302(j)(7)(F) requires NMFS to promulgate regulations
implementing the provisions of section 302(j)(7).
In August 1997, NMFS published a proposed rule to implement the new
voting restriction and procedural provisions at section 302(j)(7) (62
FR 42474; August 7, 1997). Most relevant to this proposed rulemaking,
NMFS proposed regulations that implemented the Magnuson-Stevens Act's
substantive threshold for recusal and defined the phrase ``expected and
substantially disproportionate benefit''. This definition established a
10 percent interest threshold in either the total harvest, marketing or
processing, or ownership of vessels as an indicator of whether an
affected individual's interest in the fishery was significant enough to
constitute an expected and substantially disproportionate benefit for
purposes of recusal determinations. In the proposed rule preamble, NMFS
explained that it interpreted the statutory term ``benefit'' to include
both positive and negative impacts on the affected individual's
financial interests, noting that, ``Avoiding a negative is as
advantageous as gaining a positive.'' NMFS also explained that the
choice of a particular percentage as ``indicative of a `significant'
interest'' was a difficult one. NMFS stated that it was considering ``a
tiered approach, with different percentage indicators for different-
sized sectors of the fishing industry,'' but that it had been unable to
develop a workable model and invited suggestions from the public on
The proposed regulations also defined the term ``designated
official'' as ``an attorney designated by the NOAA General Counsel''
and included a process for the issuance and review of recusal
determinations. The proposed regulations did not define the term
``Council decision,'' provide any formula for calculating harvesting,
processing, and marketing activity of an affected individual's
financial interests relative to the 10 percent thresholds, or provide
any regulatory guidance on how to determine the existence of ``close
causal link.''
NMFS received a number of comments on the proposed rule and
published a final rule implementing the voting recusal provisions in
November 1998 (63 FR 64182; November 19, 1998). In response to one
comment, NMFS added a regulatory definition for the term ``Council
decision.'' Several comments addressed the proposed definition of
``expected and substantially disproportionate benefit.'' In response to
one comment, NMFS explained that the agency had focused on the
comparative aspect of the defined term and emphasized that, ``The
disqualifying effect is not that the Council action will have a
significant impact on the member's financial interest; the action must
have a disproportionate impact as compared with that of other
participants in the fishery sector.'' Additionally, some commenters
said the 10 percent thresholds were too high for any fishery; other
commenters said the 10 percent thresholds were too low for small
fisheries. NMFS maintained the 10 percent thresholds, and responded
``While NMFS has no quantitative data on which to base the selection of
10 percent as the disqualifying industry share, qualitative information
available from existing disclosure forms and other
sources indicates that this value would accomplish the Congressional
intent of disqualifying from voting only those current Council members
whose financial interests would be disproportionately affected by
Council actions, in comparison with the financial interests of other
participants in the fishery sector.'' NMFS received no comments on, and
made no changes in the final rule to address, the calculation of
harvesting, processing and marketing activity relative to the 10
percent thresholds or regulatory guidance on determining the existence
of ``close causal link.'' The recusal regulations, located at 50 CFR
600.235, became effective on February 17, 1999.
No changes were made to the statutory or regulatory provisions
governing financial disclosure and recusal until January 2007, when the
Magnuson-Stevens Act was reauthorized (Pub. L. 109-479). The Magnuson-
Stevens Reauthorization Act amended section 302(j) to include advocacy
and lobbying as types of activities that must be disclosed by affected
individuals and to require members of each Council's Scientific and
Statistical Committee to disclose their financial interests. NMFS
modified the regulations governing disclosure of financial interests
and recusal to address these changes in 2010 (75 FR 59143, September
27, 2010). No further amendments to section 302(j) have occurred since
the Magnuson-Stevens Reauthorization Act and NMFS has made no
modifications to the financial disclosure and recusal regulations since
Since the effective date of the recusal regulations in February
1999, designated officials within the regional offices of the NOAA
Office of General Counsel have followed and applied the recusal
regulations and have prepared and issued recusal determinations when
requested and as necessary for affected individuals within each of the
Councils. However, because the regulations lack guidance on several key
aspects of reaching a recusal determination, and provide little
guidance on the procedures to be followed when preparing and issuing a
recusal determination, designated officials have developed practice
principles and interpretations over time to fill in these regulatory
gaps and to address new factual circumstances that have arisen. The
following describes the current practice, principles, and
interpretations that have been used in preparing and issuing recusal
determinations, which are being either modified or supplemented through
Without a regulatory formula for calculating harvesting, processing
or marketing activity (i.e., covered activity) and vessel ownership
relative to the 10 percent thresholds, designated officials have
applied a ``full attribution'' principle. Under the full attribution
principle, all covered activity of, and all vessels owned by, a
financial interest that is wholly or partially owned by an affected
individual are fully attributed to the affected individual. Percentage
of ownership has not been a relevant factor under the full attribution
principle; the determining factor has been that there is some
percentage of ownership in the financial interest. The full attribution
principle has also been applied to employment; and to all covered
activity of, including all vessels owned by, a financial interest that
employs an affected individual. The full attribution principle also
extends to financial interests that are wholly or partially owned by an
affected individual's financial interests.
A slightly different attribution principle has been applied for
financial interests that wholly or partially own an affected
individual's financial interests. A designated official will apply the
full attribution principle when a financial interest owns fifty percent
or more of an affected individual's financial interest. However, if a
financial interest owns less than fifty percent of an affected
individual's financial interest, then the designated official has not
attributed to an affected individual any covered activity of, or
vessels owned by, the financial interest.
Finally, designated officials have followed certain guidelines in
applying attribution principles when the financial interest is an
association or organization, or when a spouse, partner, or minor child
holds the financial interest. For associations and organizations,
designated officials have applied the full attribution principle when
the affected individual's association or organization receives from
NMFS an allocation of harvesting or processing privileges, owns
vessels, or is directly engaged in a covered activity. However, if the
association or organization, as an entity separate from its members,
does not own any vessels and is not directly engaged in any covered
activity, designated officials have not attributed to the affected
individual the covered activity of, or vessel ownership by, the members
of the association or organization. For spouses, partners, and minor
children, application of the attribution principle depends on whether
there is ownership of, or employment with, the financial interest.
Designated officials apply the full attribution principle and attribute
to an affected individual all covered activity of, and vessels owned
by, a financial interest that is wholly or partially owned by a spouse,
partner, or minor child. Similarly, designated officials have applied
the full attribution principle and attributed to an affected individual
all covered activity of, and vessels owned by, a financial interest
that employs a spouse, partner or minor child when the spouse's,
partner's, or minor child's compensation is influenced by, or
fluctuates with, the financial performance of the company. Conversely,
designated officials have not attributed to an affected individual any
covered activity of, or vessels owned by, a financial interest that
employs a spouse, partner or minor child when the spouse's, partner's,
or minor child's compensation is not influenced by, or fluctuates with,
Since implementation of the recusal regulations in 1999, designated
officials have understood that the Magnuson-Stevens Act and the
regulations require a voting recusal when there is a close causal link
between the Council decision and an expected and substantially
disproportionate benefit to an affected individual's financial interest
in the fishery or sector of the fishery affected by the Council
decision relative to other participants and using the most recent
fishing year for which information is available. However, without any
regulatory guidance concerning the close causal link requirement, the
issue has sometimes been subsumed in the determination of whether there
is an expected and substantially disproportionate benefit.
Regulations at 50 CFR 600.235(f) set forth two paths for initiating
a recusal determination. First, an affected individual may request a
recusal determination by notifying the designated official either
within a reasonable time before the Council meeting at which the
Council decision will be made or during a Council meeting before a
Council vote on the decision. Second, a designated official may
initiate a recusal determination. The designated official may initiate
based on his or her knowledge of the fishery and the financial
interests disclosed by an affected individual or
based on written and signed information received either within a
reasonable time before a Council meeting or, if the issue could not
have been anticipated before the meeting, during a Council meeting
before a Council vote on the decision. Regulations at Sec.  600.235(f)
also state that the recusal determination will be based upon a review
of the information contained in the affected individual's financial
interest form and any other reliable and probative information provided
in writing and that all information considered will be made part of the
public record for the decision.
While the regulations at Sec.  600.235(f) provide some structure
for the initiation, development, and issuance of a recusal
determination, they are silent on other important procedural aspects of
preparing and issuing a recusal determination. For example, the
regulations do not address: (1) The process by which the designated
official will make the affected individual, the Council, and the public
aware of recusal determinations, (2) how and when designated officials
are identified, or (3) the timing of issuing a recusal determination
relative to the start of a Council meeting and the request for review
process. Without additional regulatory guidance concerning the
procedure for preparing and issuing recusal determinations, regional
practices have developed to address these gaps.
Several recent determinations resulting in voting recusals have
raised concerns among the Regional Fishery Management Councils. In
April 2015, the NOAA General Counsel received a request for review
(i.e., appeal) of a recusal determination issued in March 2015 that
concluded that a voting recusal was required for an affected individual
on the North Pacific Council. The appeal challenged the use of the full
attribution approach and argued that the regulations and common
business practices support using a proportional share, or partial
attribution, approach to calculating financial interests. Under such an
approach, an affected individual would be attributed with covered
activity and vessel ownership commensurate with the affected
individual's percentage of ownership in the company. The appeal noted
that the language of the regulations refers to the interests of the
affected individual and explained that if an affected individual owns
five percent of a fishing company, then the affected individual only
receives five percent of the company distributions because the affected
individual does not have a financial interest in more than five percent
of the company. According to the appeal, to attribute all activity of a
partially-owned company unreasonably credits the affected individual
with more of the financial interest than is actually owned. The appeal
also argued that in an employment situation, the affected individual
should only be attributed with a proportional share of the harvesting
and processing activity of companies that are partially-owned
subsidiary companies of the affected individual's employer.
After reviewing the appeal, the NOAA General Counsel upheld the use
of the full attribution approach, concluding that (1) the term
``interest'' as used in the recusal regulations is broad and not
limited solely to direct financial benefit from harvest; (2) that the
full attribution approach is more consistent with the purpose of the
Magnuson-Stevens Act and the regulations; and (3) while past practice
is not necessarily binding, consistency and predictability are
important for all stakeholders in the fisheries management process.
After receiving another recusal determination in May 2015 that used
the full attribution approach, the North Pacific Council submitted a
letter to NMFS in August 2015, asking NMFS to consider changes to the
way in which covered activity is calculated. Specifically, the North
Pacific Council asked NMFS to consider using a proportional share
approach similar to the approach described in the appeal. Under the
approach, the designated official would attribute to the affected
individual the percentage of the company's covered activity that is
commensurate with the affected individual's ownership percentage. The
North Pacific Council argued that use of the full attribution approach
is an ``unfair and illogical interpretation of the recusal regulations,
and results in unintended recusals of Council members.'' The North
Pacific Council also stated that it had general concerns with the lack
of transparency and predictability of the recusal process and asked
that NMFS provide more clarity and predictability to the process of
issuing recusal determinations.
While NMFS was considering the North Pacific Council's requests,
another determination requiring a voting recusal of an affected
individual of the North Pacific Council was issued in March 2017. The
recusal determination applied the full attribution approach and
determined that a voting recusal was required because the action before
the North Pacific Council was a Council decision and the affected
individual's financial interests harvested more than ten percent of the
total harvest in the affected fishery during the previous fishing year.
However, the Council decision was a fishery management plan amendment
that required no implementing regulations. The North Pacific Council
argued that because the action had no real possibility of affecting the
affected individual's financial interests, there was no close causal
link between the Council decision and the expected and substantially
disproportionate benefit to the affected individual's financial
interests and no voting recusal should have been required. Around this
same time, the Western Pacific Council raised similar concerns with
regard to ``close causal link'' between a benefit and a Council
decision, and what constituted an ``expected and substantially
disproportionate benefit'' regarding an affected individual's financial
interest, especially when the affected individual is an employee of a
fishing company versus an owner of a fishing company.
NMFS discussed these concerns with the Council Coordination
Committee and decided to initiate this rulemaking to address the
concerns. NMFS tasked a recusal working group, comprised of experts in
both NMFS and the NOAA Office of General Counsel, to consider whether
the agency should take any action regarding how the recusal provisions
should be applied in such circumstances in the future. The group
considered the attribution principles for recusal determinations and
sought solutions to clarify the application of the close causal link
requirement in the Magnuson-Stevens Act. The group also discussed ways
in which to improve the transparency of regional procedures employed in
preparing and issuing recusal determinations.
NMFS proposes to make the following changes to the financial
disclosure and recusal regulations at Sec.  600.235.
NMFS proposes regulations that explain the steps to be followed in
determining whether an affected individual is required to be recused
from voting. Regulations at 50 CFR 600.235(c)(3) would be modified to
clarify the multi-part test that is used in making this determination.
First, the designated official would need to determine if the action
being taken by a Council is a ``Council decision'' and
whether an affected individual (i.e., member, spouse, partner, minor
child) had an interest in the fishery affected by the Council decision.
If the action before the Council is not a ``Council decision'' or no
affected individuals have any financial interests in the fishery
affected by the decision, the designated official's inquiry would end.
But if the answer to these factors is yes, the designated official
would then need to examine the next two factors: Whether there is an
expected and substantially disproportionate benefit to the affected
individual's financial interests and whether there is a close causal
disproportionate benefit. Under the proposed rule, a designated
official would be able to decide the order in which these factors are
examined. If the answer to either of these factors is no, then the
designated official's inquiry would end and a voting recusal would not
be required. But if the answer to both of these factors is yes, then a
voting recusal would be required.
NMFS proposes to make minor adjustments to the current regulatory
definition of ``expected and substantially disproportionate benefit.''
One of these changes would be to remove the ten percent recusal
thresholds from the definition of ``expected and substantially
disproportionate benefit'' and use them to define the term
``significant financial interest.''
NMFS also proposes to add Sec.  600.235(c)(5) to provide guidance
on determining whether an expected and substantially disproportionate
benefit exists. This proposed regulation clarifies that an expected and
substantially disproportionate benefit will be determined to exist if
an affected individual has a significant financial interest in the
fishery that is likely to be positively or negatively impacted by the
Council decision. An affected individual's significant financial
interest in a fishery indicates that the affected individual will
experience an expected and substantially disproportionate impact,
either positive or negative, relative to the financial interests of
other participants in the fishery. The magnitude of the positive or
negative impact is not determinative of whether there is an expected
and substantially disproportionate benefit. NMFS also proposes
regulatory guidance on how to calculate an affected individual's
financial interests in order to determine whether the affected
individual has a significant financial interest, which is described
later in the preamble.
NMFS proposes to create a definition of close causal link to better
guide the application of the requirement for causation between a
benefit to the financial interests of an affected individual. The
proposed definition would state that a close causal link means that ``a
Council decision would reasonably be expected to directly impact or
affect the financial interests of an affected individual.''
NMFS also proposes regulatory guidance on determining whether a
close causal link exists. Due to the nature of Council decisions, NMFS
concluded that it generally is likely that a close causal link between
a benefit and a Council decision exists for all Council decisions,
especially those with implementing regulations, as regulations
typically impact the public directly in some way. However, NMFS also
recognizes that there may be instances where no impact would occur or
where the chain of causation is attenuated. Therefore, NMFS proposes
exceptions under which a designated official may determine that a close
causal link does not exist. One proposed exception would be for a
Council decision affecting a fishery or sector of a fishery in which an
affected individual has a financial interest but the chain of causation
between the Council decision and the affected individual's financial
interest is attenuated or is contingent on the occurrence of events
that are speculative or that are independent and unrelated to the
Council decision. The other proposed exception would be for a Council
decision affecting a fishery or sector of a fishery in which an
affected individual has a financial interest but there is no real, as
opposed to speculative, possibility that the Council decision will
affect the affected individual's financial interest. This proposed
language provides guidance on how to determine an element of causation
in those instances where a Council decision is not reasonably expected
to directly impact or affect the financial interest of an affected
In response to the requests for increased transparency and
predictability, NMFS proposes to amend the regulations to provide
guidance on the attribution principles to be applied when calculating
whether an affected individual has a significant financial interest in
a fishery. The proposed attribution principles address (1) direct
ownership and employment, (2) indirect ownership, (3) parent ownership,
(4) financial interests in associations and organizations, and (5)
financial interests of a spouse, partner, or minor child. The proposed
attribution principles for parent ownership, associations and
organizations, and financial interests of a spouse, partner, or minor
child represent the approach NMFS has been following and would continue
to follow if this proposed rule is finalized. However, NMFS proposes to
adopt a partial attribution approach when calculating direct and
NMFS recognizes a distinction between two different types of
partial interest: (1) Direct ownership, and (2) indirect ownership
(i.e., a subsidiary relationship). A direct ownership interest exists
where a council member (or the member's employer) directly owns some
interest--whether full ownership or some share--in a particular
company. An indirect or subsidiary ownership interest exists where a
company in which the council member (or the member's employer) has a
direct interest owns a share of another company. NMFS believes the
direct and indirect ownership situations should be distinguished
because an individual has a direct interest in, and more control over,
a company that he or she owns, even if the interest represents a
partial interest in the company. On the other hand, an individual's
indirect ownership interest in a subsidiary company is more attenuated.
Note also that in some cases employees are treated differently than
owners because an employee cannot be ``partially'' employed by a
An affected individual would be considered to have a direct
ownership interest when the affected individual wholly or partially
owns, or is employed by, a business, vessel, or other entity (i.e.,
company) reported on the individual's financial interest form. For
direct ownership, NMFS proposes that a designated official fully
attribute to an affected individual all covered activity and vessel
ownership of a company when the affected individual is employed by, or
owns 50 percent or more of, the company. If the affected individual
owns less than 50 percent of the company, NMFS proposes that a
designated official attribute covered activity and vessel ownership
commensurate with the affected individual's percentage of ownership.
In the case of direct ownership, NMFS determined that affected
individuals owning 50 percent or more of a company should continue to
be attributed with 100 percent of the covered activity and vessel
ownership of that company because an individual has a direct interest
in, and more control over, a company that he or she owns, even if the
interest represents less than a 100 percent interest in the company.
NMFS believes that when a Council member owns a controlling interest in
a company, the member can also control a company's response to any
particular council decision and the potential for a conflict of
interest is heightened. Additionally, NMFS determined that an employee
of a company should continue to be attributed with 100 percent of the
covered activity and vessel ownership of that company because an
employee cannot be ``partially'' employed and thus the employee's
interest is always fully attributed to a company through the nature of
their employment. However, NMFS determined that a partial attribution
approach for less than 50 percent direct ownership would more closely
align the owner's actual ownership interest in a company and better
reflect the ability to control the company's activities. Therefore NMFS
proposes to only attribute the proportional level of interest to the
In the case of indirect (or subsidiary) ownership, an affected
individual would be considered to have an indirect ownership interest
when the affected individual's company or employer wholly or partially
owns a company that must be reported on the individual's financial
interest form. For subsidiary ownership, NMFS proposes to apply a
partial attribution approach and attribute to the affected individual
the harvesting, processing, and marketing activity of, and vessels
owned by, a company that is owned by an affected individual's company
or employer commensurate with the member's percentage ownership in the
directly owned company, and the directly owned company's ownership in
the indirectly owned company. For example, if Jones owns 25 percent of
Acme, and Acme owns 50 percent of Zenith, then Jones should be
attributed 12.5 percent of Zenith's activity in an affected fishery.
NMFS determined that this partial attribution approach better captures
the attenuated nature of indirect ownership and reflects that an
affected individual has less control or a more partial interest in the
activities of a company indirectly owned by the affected individual's
directly owned company or employer. In any of these cases, the burden
would be on the Council member to provide reliable information
concerning partial ownership interests. In the absence of such
information, a 100 percent interest would be assumed.
NMFS recognizes that the proposed revisions to the direct and
indirect attribution principles may not address every situation in
which an affected individual's interest may seem attenuated. However,
under the proposed multi-part test for determining whether recusal is
required, a designated official must specifically determine whether
there is a close causal link between a council decision and an expected
and substantially disproportionate benefit to an affected individual's
financial interests. The proposed guidance on close causal link will
further address situations where an affected individual's interest is
attenuated from a Council decision.
In order to increase transparency and to add clarity to the process
for development and issuance of recusal determinations, NMFS intends to
require that each NMFS Regional Office, in conjunction with NOAA Office
of General Counsel, will publish and make available to the public a
Regional Recusal Determination Procedure Handbook, which explains the
process and procedure typically followed by the region in preparing and
issuing recusal determinations. The handbook would include: A statement
that the Regional Recusal Determination Procedure Handbook is intended
as guidance to describe the recusal determination process and procedure
typically followed within the region; identification of the Council(s)
to which the Regional Recusal Determination Procedure Handbook applies;
a description of the process for identifying the fishery or sector of
the fishery affected by the action before the Council; a description of
the process for preparing and issuing a recusal determination relative
to the timing of a Council decision; a description of the process by
which the Council, Council members, and the public will be made aware
of recusal determinations; and a description of the process for
identifying the designated official(s) who will prepare recusal
determinations and attend Council meetings.
In addition to the proposed changes described above, NMFS proposes
to make several minor changes to section 600.235 to provide additional
clarity to the financial disclosure regulations and guidance concerning
the length of time Regional Administrators and NMFS Regional Offices
must retain financial disclosure forms submitted by Council and
Scientific and Statistical Committee (SSC) members. First, NMFS
proposes to amend the heading for section 600.235 to include reference
to recusal. The current heading for section 600.235 only refers to
financial disclosure but this section has included the recusal
regulations since 1998. The addition of ``recusal'' to the heading
would provide clarity as to the subject of the regulations at section
600.235.
Second, the proposed rule would modify regulations at 600.235(h) to
change ``financial disclosure report'' to ``Financial Interest Form''
to provide the accurate title of the financial disclosure form when it
is referenced in the regulations. The proposed modifications would
provide clarity and consistency in the financial disclosure regulations
by including an accurate reference to the financial disclosure form.
Third, the proposed rule would add a new paragraph 600.235(b)(5),
which would require a Regional Administrator to retain a Council
member's financial disclosure forms for 20 years from the date the form
is signed by the Council member, or in accordance with the records
retention schedule published by the National Archives and Records
Administration (NARA), and as implemented by NOAA, if the schedule
requires retention of such forms for longer than 20 years. Currently,
the financial disclosure regulations do not provide Regional
Administrators or NMFS Regional Offices with any guidance on the length
of time a Council member's financial disclosure forms should be
retained by NMFS. NMFS has determined that financial disclosure forms
submitted by Council members are important documents worthy of
retention for 20 years after their submission, or for as long as
required by NARA. The proposed change would ensure that a Council
member's financial disclosure forms are available for public inspection
and agency examination for a sufficient period of time during and
following the Council member's tenure on a regional fishery management
Finally, the proposed rule would make minor clarifying changes
through proposed Sec.  600.235(b)(8) by changing the phrase ``shall
maintain on file'' to ``must retain.''
consistent with the Magnuson-Stevens Act, and other applicable law,
This proposed action is significant for the purposes of Executive
This rule regulates only those Council members who have voting
privileges and are appointed to their position by the Secretary of
This proposed rule would modify regulations at 50 CFR 600.235 to
provide guidance to: (1) Ensure consistency and transparency in the
calculation of an affected individual's financial interests; (2)
determinations. NMFS invites public comment on whether the changes
proposed are sufficient and effective in distinguishing the calculation
of direct ownership, indirect ownership and employment interests;
whether the proposed language appropriately defines when a close causal
link exists between a Council decision and a benefit; and whether the
establishment of regional procedures provides consistency and
transparency in the preparation and issuance of recusal determinations.
Specifically, NMFS invites public comment on whether partial
attribution should extend to cases where the affected individual is an
employee, a member of an association or organization, a spouse,
partner, or minor child of a council member, or in cases of parent
ownership; on whether there are additional circumstances that merit an
exception from the standard that a close causal link exists for all
Council decision that require implementing regulations and that affect
a fishery or sector of a fishery in which an affect individual has a
financial interest; whether partial attribution appropriately reflects
the attenuated nature of indirect ownership. NMFS also invites comment
on whether a 50 percent ownership threshold captures the nature of
direct ownership, including whether an interest of less than 50 percent
might in some cases be controlling, but also notes that any subjective
control test would likely require council members to submit additional
financial information and would require NMFS to develop a process and
expertise to analyze control. In accordance with 50 CFR 600.235,
Council members may be required to recuse themselves from voting on a
Council decision that would have a significant and predictable effect
on a disclosed financial interest. This proposed rule would have no
effect on any small entities, as defined under the Regulatory
Flexibility Act, 5 U.S.C. 601. As a result, an initial regulatory
part 600 as follows:
2. In Sec.  600.235:
b. In paragraph (a) add in alphabetical order the definitions for
``Close causal link,'' ``Expected and substantially disproportionate
benefit,'' and ``Significant financial interest;''
c. Redesignate paragraphs (b)(5) through (b)(7) as paragraphs (b)(6)
through (b)(8), respectively, add new paragraph (b)(5), and revise
newly redesignated paragraph (b)(8);
d. Revise paragraph (c)(3), redesignate paragraph (c)(4) as (c)(7), and
add new paragraphs (c)(4), (c)(5), and (c)(6);
e. Revise the heading of paragraph (f), (f)(1), and add paragraph
(f)(6);
Sec.  600.235  Financial disclosure and recusal.
Close causal link means that a Council decision would reasonably be
expected to directly impact or affect the financial interests of an
Expected and substantially disproportionate benefit means a
positive or negative impact with regard to a Council decision that is
likely to affect a fishery or sector of a fishery in which the affected
individual has a significant financial interest.
(1) A greater than 10-percent interest in the total harvest of the
fishery or sector of the fishery affected by the Council decision;
(2) A greater than 10-percent interest in the marketing or
processing of the total harvest of the fishery or sector of the fishery
affected by the Council decision; or
(3) Full or partial ownership of more than 10 percent of the
vessels using the same gear type within the fishery or sector of the
fishery affected by the Council decision.
(5) The Regional Administrator must retain the Financial Interest
Form for a Council member for 20 years from the date the form is signed
by the Council member or in accordance with the current NOAA records
(8) The Regional Administrator must retain the Financial Interest
Forms of all SSC members for at least five years after the expiration
of that individual's term on the SSC. Such forms are not subject to
sections 302(j)(5)(B) and (C) of the Magnuson-Stevens Act.
(3) In making a determination under paragraph (f) of this section
as to whether a Council decision will have a significant and
predictable effect on an affected individual's financial interests, the
designated official will:
(i) Initially determine whether the action before the Council is a
Council decision, and whether the affected individual has any financial
interest in the fishery or sector of the fishery affected by the
(ii) If the designated official determines that the action is not a
Council decision or that the affected individual does not have any
financial interest in the fishery or sector of the fishery affected by
the action, the designated official's inquiry ends and the designated
official will determine that a voting recusal is not required under 50
CFR 600.235.
(iii) However, if the designated official determines that the
action is a Council decision and that the affected individual has a
the Council decision, a voting recusal is required under 50 CFR 600.235
(A) An expected and substantially disproportionate benefit to the
affected individual's financial interest (see paragraph (c)(5) of this
(B) A close causal link (see paragraph (c)(4) of this section)
between the Council decision and the expected and substantially
(4) Determining close causal link. (i) For all Council decisions
that require implementing regulations and that affect a fishery or
sector of a fishery in which an affected individual has a financial
interest, a close causal link exists unless:
(A) The chain of causation between the Council decision and the
affected individual's financial interest is attenuated or is contingent
on the occurrence of events that are speculative or that are
independent of and unrelated to the Council decision; or
(B) There is no real, as opposed to speculative, possibility that
the Council decision will affect the affected individual's financial
(ii) For Council decisions that do not require implementing
regulations, a close causal link exists if there is a real, as opposed
to speculative, possibility that the Council decision will affect the
affected individual's financial interest.
(5) Determining expected and substantially disproportionate
benefit. A designated official will determine that an expected and
substantially disproportionate benefit exists if an affected individual
has a significant financial interest (see paragraph (c)(6) of this
section) in the fishery or sector of the fishery that is likely to be
positively or negatively affected by the Council decision. The
magnitude of the positive or negative impact is not determinative of
whether there is an expected and substantially disproportionate
benefit. The determining factor is the affected individual's
significant financial interest in the fishery or sector of the fishery
affected by the Council decision.
(6) Calculating significant financial interest--(i) Information to
be used. (A) The designated official will use the information included
in the Financial Interest Form and any other reliable and probative
information provided in writing.
(B) The designated official may contact an affected individual to
better understand the reported financial interest or any information
(C) The designated official will presume that the information
reported on the Financial Interest Form is true and correct and the
designated official is not responsible for determining the veracity of
the reported information when preparing a determination under paragraph
(D) If an affected individual does not provide information
concerning the specific percentage of ownership of a financial interest
reported on his or her Financial Interest Form, the designated official
will attribute all harvesting, processing, or marketing activity of,
and vessels owned by, the financial interest to the affected
(ii) Attribution principles to be applied when calculating an
affected individual's financial interests relative to the significant
financial interest thresholds. The designated official will apply the
following principles when calculating an affected individual's
financial interests relative to the significant financial interest
thresholds for the fishery or sector of the fishery affected by the
action. For purposes of this paragraph, use of the term ``company''
includes any business, vessel, or other entity.
(A) Direct ownership (companies owned by, or that employ, an
affected individual). The designated official will attribute to an
affected individual all harvesting, processing, and marketing activity
of, and all vessels owned by, a company when the affected individual
owns 50 percent or more of that company. If an affected individual owns
less than 50 percent of a company, the designated official will
attribute to the affected individual the harvesting, processing, and
marketing activity of, and vessels owned by, the company commensurate
with the affected individual's percentage of ownership. The designated
official will attribute to an affected individual all harvesting,
processing, and marketing activity of, and all vessels owned by, a
company that employs the affected individual.
(B) Indirect ownership (companies owned by an affected individual's
company or employer). The designated official will attribute to the
affected individual the harvesting, processing, and marketing activity
of, and vessels owned by, a company that is owned by that affected
individual's company or employer commensurate with the affected
individual's percentage ownership in the directly owned company, and
the directly owned company's ownership in the indirectly owned company.
(C) Parent ownership (companies that own some percentage of an
affected individual's company or employer). The designated official
will attribute to an affected individual all harvesting, processing,
and marketing activity of, and all vessels owned by, a company that
owns fifty percent or more of a company that is owned by the affected
individual or that employs the affected individual. The designated
official will not attribute to an affected individual the harvesting,
processing, or marketing activity of, or any vessels owned by, a
company that owns less than fifty percent of a company that is owned by
the affected individual or that employs the affected individual.
(D) Associations and Organizations. An affected individual may be
employed by or serve, either compensated or unpaid, as an officer,
director, board member or trustee of an association or organization.
The designated official will not attribute to the affected individual
the vessels owned by, or the harvesting, processing, or marketing
activity conducted by, the members of that association or organization
if such organization or association, as an entity separate from its
members, does not own any vessels and is not directly engaged in
harvesting, processing or marketing. However, if such organization or
association receives from NMFS an allocation of harvesting or
processing privileges, owns vessels, or is directly engaged in
harvesting, processing or marketing, the designated official will
attribute to the affected individual the vessels owned by, and all
harvesting, processing, and marketing activity of, that association or
(E) Financial interests of a spouse, partner or minor child--(1)
Ownership. The designated official will attribute to an affected
individual all harvesting, processing, and marketing activity of, and
all vessels owned by, a company when the affected individual's spouse,
partner or minor child owns 50 percent or more of that company. If an
affected individual's spouse, partner or minor child owns less than 50
percent of a company, the designated official will attribute to the
of, and vessels owned by, the company commensurate with the spouse's,
partner's or minor child's percentage of ownership.
(2) Employment. The designated official will not attribute to an
affected individual the harvesting, processing, or marketing activity
of, or any vessels owned by, a company that employs the affected
individual's spouse, partner or minor child when the spouse's,
partner's or minor child's compensation are not influenced by, or
fluctuate with, the financial performance of the company. The
designated official will attribute to an affected individual all
harvesting, processing, and marketing activity of, and all vessels
owned by, a company that employs the Council
member's spouse, partner or minor child when the spouse's, partner's or
minor child's compensation are influenced by, or fluctuate with, the
(f) Process and procedure for determination. (1) At the request of
an affected individual, and as provided under paragraphs (c)(3) through
(6), the designated official shall determine for the record whether a
Council decision would have a significant and predictable effect on
that individual's financial interest. Unless subject to confidentiality
requirements, all information considered will be made part of the
public record for the decision. The affected individual may request a
determination by notifying the designated official--
(i) Within a reasonable time before the Council meeting at which
the Council decision will be made; or
(ii) During a Council meeting before a Council vote on the
(6) Regional Recusal Determination Procedure Handbook. (i) Each
NMFS Regional Office, in conjunction with NOAA Office of General
Counsel, will publish and make available to the public its Regional
Recusal Determination Procedure Handbook, which explains the process
and procedure typically followed in preparing and issuing recusal
(ii) A Regional Recusal Determination Procedure Handbook must
(A) A statement that the Regional Recusal Determination Procedure
Handbook is intended as guidance to describe the recusal determination
process and procedure typically followed within the region.
(B) Identification of the Council(s) to which the Regional Recusal
Determination Procedure Handbook applies. If the Regional Recusal
Determination Procedure Handbook applies to multiple Councils, any
procedure that applies to a subset of those Councils should clearly
identify the Council(s) to which the procedure applies.
(C) A description of the process for identifying the fishery or
sector of the fishery affected by the action before the Council.
(D) A description of the process for preparing and issuing a
recusal determination relative to the timing of a Council decision.
(E) A description of the process by which the Council, Council
members, and the public will be made aware of recusal determinations.
(F) A description of the process for identifying the designated
official(s) who will prepare recusal determinations and attend Council
(iii) A Regional Recusal Determination Procedure Handbook may
include additional material related to the region's process and
procedure for recusal determinations not specifically identified in
paragraph (f)(6)(ii) of this section. A Regional Recusal Determination
Procedure Handbook may be revised at any time upon agreement by the
NMFS Regional Office and NOAA Office of General Counsel.
(2) A Council member may request a review of any aspect of the
recusal determination, including but not limited to, whether the action
is a Council decision, the description of the fishery or sector of the
fishery affected by the Council action, the calculation of an affected
individual's financial interests or the finding of a significant
financial interest, and the existence of a close causal link. A request
for review must include a full statement in support of the review,
including a concise statement as to why the Council member believes
that the recusal determination is in error and why the designated
official's determination should be reversed.
(h) The provisions of 18 U.S.C. 208 regarding conflicts of interest
do not apply to an affected individual who is a voting member of a
Council appointed by the Secretary, as described under section
302(j)(1)(A)(ii) of the Magnuson-Stevens Act, and who is in compliance
with the requirements of this section for filing a Financial Interest
Form. The provisions of 18 U.S.C. 208 do not apply to a member of an
SSC, unless that individual is an officer or employee of the United
States or is otherwise covered by the requirements of 18 U.S.C. 208.