Advance notice of proposed rulemaking; request for comments.
CFR Part: "50 CFR Part 253"
RIN Number: "RIN 0648-BE15"
Citation: "79 FR 36699"
Document Number: "Docket No. 140401299-4443-01"
SUMMARY: NMFS issues this advance notice of proposed rulemaking (ANPR) to provide background information and request public comment on potential amendments to the regulations governing the Fisheries Financing Program (FFP) that address several specific issues currently affecting fishers and fishing companies, and to identify specific measures that might address these issues. NMFS is requesting public comment regarding the potential implementation of changes to the current prohibitions against using the
EFFECTIVE DATE: Written comments regarding the issues in this ANPR must be received on or before
ADDRESSES: You may submit comments, identified by NOAA-NMFS-2014-0062, by any one 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-2014-0062, click the "Comment Now!" icon, complete the required fields, and enter or attach your comments.
* Mail: Submit written comments to NMFS MB5,
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.) voluntarily submitted 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). Attachments to electronic comments will be accepted in Microsoft Word, Excel, or Adobe PDF file formats only. Related documents, including the
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION: The
The FFP is a direct government loan program that receives annual loan authority from
General Program Requirements
In order to be eligible for this program:
1. Borrower must be a U.S. citizen, or an entity who is a citizen for the purpose of documenting a vessel in the coastwise trade under 46 U.S.C. 50501,
2. Borrower must have a good credit and earnings record, net worth, and liquidity in support of the project,
3. Lending must be fully secured with borrower's assets, which may include personal guarantees and additional collateral not directly associated with the project,
4. Borrower must generally have the ability, experience, resources, character, reputation, and other qualifications necessary for successfully operating, utilizing, or carrying out the project.
The FFP makes long term, fixed rate loans with interest rates of two percent over the
Applicants must pay a fee of 0.5% of the amount applied for with the application for a new loan. Half of this is the filing fee, which is nonrefundable.
Need for Action
The FFP has operated under regulations stating that loans will not be made for the cost of new vessel construction or vessel refurbishing that materially increases an existing vessel's harvesting capacity. Vessel owners have indicated that a significant portion of the existing fleet of U.S. fishing vessels consists of older vessels which are not optimal in terms of safety, efficiency, and environmental and fuel-efficient operation. The country needs to maintain the economic benefits of having a commercial fishing industry. This industry is a large employer, produces significant exports, and feeds people. The economic benefits trickle down to many segments of the national economy, including but not limited to the insurance, fuel, and vessel supply and equipment sectors. In many communities, the fishing industry is an essential element in their survival. This action will also generate employment by supporting projects in U.S. shipyards. Renewal of our aging fishing fleet would improve both safety and fuel efficiency and assist in maintaining the economic benefits derived from the commercial fishing industry.
Fiscal Year 2014 Appropriations increased
In this ANPR, NMFS requests comments and input on the proposed program changes, and the provisions that need to be in place to implement those changes. Specifically, NMFS seeks to answer the following programmatic questions. Can fishing fleets be replaced or modernized without causing overfishing? Does it require that recapitalization occur only in limited access or quota share fisheries? If, implemented, are the suggested lending standards and requirements adequate?
II. Potential Program Solutions
NMFS generally does not want to finance the cost of new fishing vessels or reconstruction of existing vessels that materially increase harvesting. NMFS believes it can entertain financing these costs only for vessels participating in limited access fisheries. Where catch limits control the annual harvest, replacement or improvement of vessels does not increase the total catch. The
1. Questions Associated With Considering these Changes
a. How and where to implement new vessel construction lending and remain harvesting neutral?
b. How to identify, approve and control the use of the replaced vessel?
c. How to control movement of new or improved vessels to other fisheries?
d. How to protect the
The FFP's regulation prohibits financing the cost of either new vessel construction or a vessel refurbishing project that materially increases an existing vessel's harvesting capacity. NMFS believes it should enter into financing the construction of new vessels and refurbishing that increases a vessel's harvesting capacity only if such lending results in no significant increase in fish harvesting. We will make that determination on an application-by-application basis.
NMFS is considering two approaches in implementing this new authority: Either we will act upon plans submitted by Fishery Management Councils responsible for particular fisheries or we will allow vessel owners in any limited access fishery to use the
What fisheries are appropriate for this new lending? Would it be any fishery or just limited access fisheries?
Pros: In a limited access fishery, replacing one vessel with another maintains a constant number of vessels and permits. It provides the fishers or firms with the flexibility to tailor the replacement vessel to the market conditions at the time. If it makes sense to replace an existing vessel with a larger one, the business decision is left to the owner. The new vessel remains bound by the Total Allowable Catch in the fishery. There is no increase in harvesting.
Cons: Allowing this new lending in any fishery, without limitation, could increase the pressure on stocks not under controlled catch limits.
Where should new vessel construction be authorized--Nationwide, or in specific regions at the request of fisheries governed by specific Fishery Management Councils?
Pros: Implementing the program nationwide would remove ambiguity, allow the fisheries market to determine where and how to recapitalize, and might simplify the changes to the rule. Implementing at the request of Fishery Management Councils (FMC) would accommodate differences between regions and fisheries, and would allow the FMC to more narrowly tailor environmental analyses to regional issues and concerns.
Cons: Implementing the program nationwide might require a programmatic environmental assessment (PEA), addressing all of the fisheries of
How to deal with the replaced vessel? In the case of new vessel construction, attention must be paid to the replaced vessel to insure a capacity and harvesting-neutral outcome. With no restrictions on the replaced vessel, it will become available for use in other U.S. fisheries or elsewhere in the world. This result could lead to, or increase, over fishing. The options are to have the vessel scrapped, have the vessel title restricted by revoking its fisheries endorsement and prohibiting foreign transfer, or have no restriction. An alternative would be to prohibit the replaced vessel's use in any U.S. fishery without the written approval of the FMC that manages that fishery. A related question is whether an FMC should be given responsibility to make such approvals. Included in considerations surrounding replacement vessels is what vessel is replaced. Can it be any fishing vessel or must it be one of similar capacity and in the identical fishery? Vessels in limited access fisheries are predominantly federally documented. Should we require that both new and replacement vessels be federally documented?
Pros: To require the replaced vessel to be scrapped would be the most straightforward solution. The business calculation would be simplified. Once the new vessel goes into operation, the replaced vessel would have a set time to be scrapped. However, some owners have expressed the wish to be able to re-sell their replaced vessel to another permit-holder in the same fishery, who would then scrap that replaced vessel. Title restriction allows the replaced vessel, which may have significant residual value, to be used in a non-fishing activity. Applicants will want to realize the greatest financial return from the replaced vessel.
Cons: Requiring vessels to be scrapped may cause owners to delay replacement of older vessels with significant residual value, which would slow the recapitalization effort and extend the use of older, less efficient vessels because of the cost involved and the potential loss of revenue from not having an alternative use. Title restriction has been an issue with State-documented vessels. Having no restriction isn't consistent with being capacity-neutral. Not requiring the vessel to be scrapped creates enforcement difficulties, as illustrated by the vessel capacity reduction programs. Under the latter programs, the
What would we consider for the timing of the removal? We see two options. Option one is to require the removal restriction prior to funding the loan. Option two would require the removal restriction within four months of the new vessel being put in service.
Pros: Removal of the replaced vessel prior to funding the loan makes the process straightforward. There is no risk that the loan can be used to increase the number of vessels in a fishery. Removal within four months of the new vessel entering service would provide a break-in period for the replacement vessel, thus minimizing the disruption to the owner's operations.
Cons: Removal prior to funding exposes the vessel owner to sea trials and shake-out risk--potentially having no vessel able to fish until the new vessel is fully seaworthy. Management of
The FFP has a negative FCRA subsidy rate. As such, no appropriation of subsidy is required to allow program lending. New vessel construction lending and major rebuilding projects pose higher credit risks and are more labor intensive than the current program. Additionally, the 2014 appropriation results in an increase to the
How do we design the requirements and guidelines to protect the
Cost overruns pose a significant risk to the
Pros: A performance bond/insurance (a common practice) provides a payout in the event that the vessel is delayed in the shipyard, faces materials cost increases due to market fluctuations, or its final cost increases for other reasons. A reserve fund in the amount of 25% to 50% of the estimated cost of the vessel provides the same functionality, increasing the assurance that the vessel will be completed and viable for its intended use in a fishery, even if the cost rises inordinately. Either of these mechanisms would reduce the risk to the
Cons: The performance bond/insurance would raise the owner's cost somewhat. The reserve fund would raise the owner's initial cash needs substantially, requiring the aggregation of between 45% and 70% of the vessel's total cost prior to closing on the
2. Project Monitoring
The vessel construction in progress must be monitored to certify milestones for periodic payments and the adequacy of the work. The
Pros: Use of a vessel surveyor to monitor construction is the standard. Ship surveyors are a skilled trade, with industry certifications and licenses. The cost of the surveyor is generally proportional to the cost of the vessel. The borrower is responsible for managing and reimbursing the surveyor's costs. NOAA/NMFS could be adequately represented if we required our approval of the surveyor with a requirement to report directly to NMFS. Use of the applicant's surveyor would be paid by the applicant, but NMFS would receive copies of the surveyor's reports to the borrower.
Cons: The borrower has already hired a project manager and other support staff, so the surveyor may add to the overall cost of the vessel. The surveyor will be reporting to the
3. Lending Allocation
The FFP's annual traditional loan authority has been
Cons: Lending authority set aside for the primary program would not be available to meet potential demand for new vessels or reconstruction projects. Recapitalization could be slowed as a result.
NMFS seeks comments on these questions and recommendations, as well as any alternatives that may achieve the same goals.
This ANPR explains the Fisheries Finance Program management history while also identifying some major potential changes to the program to support recapitalization and modernization of the fishing fleet. Some of the ideas discussed are specific changes to the current restriction on new vessel construction and reconstruction that materially increases the capacity of an existing vessel. This amendment to the
Additionally, we note that all vessel construction or reconstruction projects will be required to be performed at a shipyard in
It is NMFS's goal to move forward with a viable and flexible vessel replacement and/or modernization solution that will achieve sustainable fishery goals and objectives while minimizing adverse environmental impacts. NMFS seeks public comment on the above issues and recommendations. NMFS anticipates having a relatively short time to draft, publish, and finalize a rule to implement the new authority, as well as to obligate the funds made available for the purpose, because these funds lapse at the end of the fiscal year for which they were appropriated.
V. Submission of Public Comments
The comment period for all topics discussed in this ANPR closes on
The preceding sections provide background information regarding these topics and ideas for potential changes. The public is encouraged to submit comments related to the specific ideas and questions asked in each of the preceding sections. All written comments received by the due date will be considered in drafting proposed changes to the Fisheries Finance Program regulations. In developing any proposed regulations, NMFS must consider and analyze ecological, social, and economic impacts. Therefore, NMFS encourages comments that would contribute to the required analyses, and respond to the questions presented in this ANPR.
This rulemaking has been determined to be not significant for purposes of Executive Order 12866.
Authority: 46 U.S.C. 53701 and 16 U.S.C. 4101 et seq.
Assistant Administrator for Fisheries,
[FR Doc. 2014-15173 Filed 6-27-14;
BILLING CODE P
Most Popular Stories
- National Retail Federation Reduces Sales Forecast
- Xavier Gutierrez Appointed to Bank Board
- Long-term Strengths Emerge in U.S. Economy
- Hispanic Leader Goes the Extra Mile
- Honda' s Accord Plug-in Hybrid Is a Fuel Miser
- Weekly Jobless Claims Drop to Lowest Level in 8 Years
- Naya Rivera and Ryan Dorsey Are Married
- Menendez: No Arms for Iraq Without Intel
- Self-Induced Abortions Rise After Texas Closes Clinics
- Amazon Fire Phone Improves on Familiar: Review