110. Other requirements and authority.
[MSFCMA section 305]
a. Gear evaluation and notification of entry.
Summary: By April 11, 1998, NMFS must publish a final list of
all fisheries under the Councils' or the Secretary's authority,
and all fishing gear used in such fisheries. A proposed list
must first be published for public comment. The final list may
be revised, after notice and comment. Along with the list, we
are to publish guidelines for determining whether a fishery or
fishing gear is different enough from what's on the list to
require notification under paragraph (3).
Effective 180 days from publication of the final list, paragraph
(3) requires anyone who wants to engage in an unlisted fishery or
to use unlisted gear not to do so, without giving 90 days'
advance notice to the appropriate Council or to the Secretary for
Atlantic HMS fisheries. Emergency rules are authorized to keep
people from engaging in unlisted fisheries or using unlisted
gear, if it would "compromise the effectiveness of conservation
and management efforts under this Act."
Legislative history: This provision began life in H.R. 39 as a
discretionary FMP provision, where a Council could specify
allowable gear types and have a process for evaluating new gear.
The Senate report says the purpose is to keep new and potentially
damaging gear or fisheries from being used or conducted without
the Councils' or Secretary's knowledge. It is not intended to
require notice "for reasonable gear or fishery modifications made
by fishermen routinely to improve operations or adjust to
conditions in the fishery."
Issues: One issue is whether the fisheries to be listed are
those under active Federal management, or all fisheries within
the geographic areas covered by the Act. There is a reference to
information submitted about the fisheries in FMPs, which suggests
the smaller list. If we published an FMP-only list, though, six
months later every fisherman in other EEZ fisheries would have to
send in "advance notice" (and suspend fishing for 90 days?).
This is probably not a result intended by Congress. So,
difficult though the task may be, it is to identify all fisheries
within the geographic authority of each Council, or within the
geographic authority of the Secretary for highly migratory
species, and all fishing gear used in such fisheries.
a. Fish habitat.
Summary: This section details the new habitat requirements for
the Councils, the Secretary, and other Federal agencies. There
are two major parts, first the description and identification of
essential fish habitat (EFH), including adverse impacts and
conservation and enhancement measures. The second is the
consultation requirement for Federal agencies. By April 11,
1997, the Secretary must establish, by regulation, guidelines for
the Councils to assist them in describing and identifying EFH,
including adverse impacts caused by fishing and other activities,
and in considering measures to conserve and enhance EFH. The
Secretary must develop a schedule for amending FMPs to include
EFH, and for reviewing EFH identification based on new
information. The Secretary, in consultation with participants in
the fishery, must provide each Council with information and
recommendations to help in the identification of EFH, adverse
impacts, and conservation and enhancement measures.
The Secretary must review the Department's programs to ensure
that any relevant programs further the conservation and
enhancement of EFH. The Secretary must work with other Federal
agencies to further the conservation and enhancement of EFH.
Each Federal agency is required to consult with the Secretary
regarding any activity that is, or is proposed to be, authorized,
funded, or undertaken by the agency, and that may adversely
affect EFH. The Councils may submit comments to the Secretary
and other Federal and State agencies, on actions by Federal or
State agencies that may affect the habitat of a fishery resource.
The Councils must comment if the activity is likely to
substantially affect the habitat of anadromous fish. If the
Secretary receives information from a Council, or Federal or
State agency, or finds out through other means, that an activity
would adversely affect EFH, the Secretary must recommend to that
agency measures that would conserve the habitat. Federal
agencies must respond to the Secretary and Council within 30 days
of receipt of the Secretary's comments. The response must
include a description of the measures used by the agency to
avoid, mitigate, or offset the impact of the activity on EFH. If
appropriate, the response must include an explanation for not
following the recommendations.
Legislative history: The habitat sections of the Sustainable
Fisheries Act strengthen the previous habitat protection measures
in the Magnuson-Stevens Act and reflect an increasing concern
that the health of fishery stocks is linked to habitat. In his
floor statement, Senator Hollings stated that habitat protection
has become a greater concern because coastal development and
pollution threaten the environment and subsequently the health of
the fish stocks. Senator Kerry, in his floor statement, pointed
out that, if you destroy the habitat, you destroy the nurseries
and the ecosystem upon which these nurseries depend, which in
turn diminishes the ability to have a sustainable fishery. While
there are many differences between the House and Senate versions
of the habitat sections, both clearly indicated the same concern
with habitat protection through first the identification of EFH
and then the consultation process.
Issues: NMFS is currently working on guidance to the Councils
for the description and identification of EFH, including
adverse impacts, and conservation and enhancement measures. NMFS
established a working group to handle the EFH requirements of the
Sustainable Fisheries Act, comprised of headquarters staff in HC,
SF, and GCF. The regions are also forming EFH work groups to
coordinate the regional EFH work.
An Advance Notice of Proposed Rulemaking (ANPR) was published on
November 8, 1996, to solicit comments and information. A second
ANPR was published on January 9, 1997. NMFS used the ANPR to
announce the availability of, and request comments on, the
Framework for the Description, Identification, Conservation, and
Enhancement of Essential Fish Habitat. The Framework includes a
means to describe and identify EFH, both in written form through
a detailed description of the habitat requirements of the managed
species, including its current and historical locations, and some
form of mapping the geographical extent of the habitat.
The Framework includes a four-tiered approach to EFH
identification and description based on the amount of data
available on a particular species and the scientific
understanding of the relationship between habitat quantity and
quality and fish production. Level one represents the least
amount of data available, just presence/absence of the species.
EFH would be everywhere the species occurs. As the amount of
information increases, the size of EFH may change, depending on
what the data indicate. Level four represents the most
information including the relation of production rates of a
species to habitat type and location.
The Framework includes a tiered approach to the identification of
adverse impacts to EFH based on the amount of data available.
Adverse impacts include impacts from fishing gear. Tier one
identification of adverse impacts would include a description of
the impacts and, if possible, a map showing the location of these
impacts. Tier two would add an evaluation of the status and
trends of EFH. Tier three would include an evaluation of the
cumulative impacts of adverse impacts, including an ecological
Another issue is how to determine the appropriate conservation
and enhancement measures for EFH. The Framework ties this in
with the adverse impacts section because the two are closely
The Framework also includes procedures to implement the
consultation requirement. NMFS is considering the most efficient
means to handle the consultation so that EFH receives appropriate
protection, while not placing more of a burden on ourselves,
other Federal agencies, the Councils, and applicants. The
requirement for NMFS to comment on all Federal and some State
actions that would adversely affect EFH could result in the
agency's reviewing tens of thousands of proposed activities
annually. This is a significant increase over the current permit
review handled by NMFS regions.
The Framework has three levels of permit review. The first is a
general concurrence for activities that would have only minimal
adverse impact on EFH. An abbreviated consultation procedure
could be the next step for activities that would require an
individual review by NMFS because of their adverse impacts on
EFH. The third level of review could be an expanded consultation
for projects that would take a lot of the agency's time to review
and develop recommendations for conserving EFH.
There are some inconsistencies in the consultation requirement
that need to be addressed. One is that, while the Councils
comment on the action to the Secretary and the appropriate
Federal or State agency, there is no requirement that anyone give
the Councils notice of the activity. NMFS is considering methods
to provide notice to the Councils. Another apparent
inconsistency is that, while the Councils and Secretary comment
on actions by Federal and State agencies, there is no requirement
for the States to consult with either the Secretary or the
Councils. NMFS is considering how best to work with the States
on this point.
b. Emergency actions and interim measures.
Summary: The effective periods for emergency rules are doubled,
to 180 days each. The extension for a second 180 days is
conditioned on a comment period on the initial emergency rule. A
further condition for Council-recommended rules is that the
Council must be actively preparing an FMP, amendment, or
permanent regulations to address the situation.
Rules responding to a public health emergency or an oil spill may
remain in effect as long as the emergency circumstances exist, if
the public has an opportunity for comment. For public health
emergencies, HHS must concur with "the Secretary's action."
This provision also allows for "interim measures" to respond to
overfishing situations. Interim measures work just like
emergency rules, except that there need be no showing of an
emergency. They are interim final rules that may remain in
effect for 180 days with a 180-day extension. The only trigger
is the existence of overfishing; the rule must respond directly
to the overfishing problem. See the discussion of 109(e)
concerning national standard 1.
Issues: HHS's concurrence with "the Secretary's action" on the
duration of the emergency rule is unclear. Perhaps the best
interpretation is that NMFS should consult with HHS (FDA)
periodically about whether the rule should be continued or
c. Effect of certain laws on certain time requirements.
Summary: This is a technical amendment, substituting E.O. 12866
for E.O. 12291.
d. Negotiated conservation and management measures.
Summary: This section allows a Council to establish a fishery
negotiation panel to develop management measures. The Secretary
may also employ such panels for overfished fisheries requiring
Secretarial regulation, Atlantic HMS fisheries, or others with
the Council's approval. By mid-April 1997, NMFS is to promulgate
regulations governing such panels, in cooperation with the now-defunct Administrative
Conference. The procedures are to be
"comparable" to those under the Negotiated Rulemaking Act (NRA).
A negotiation panel's report must specify the consensus reached
by the panel, and is to be published in the Federal Register.
Councils and the Secretary, however, need not use any of the
report in developing management measures for the fishery.
Legislative history: Senator Snowe proposed this provision. The
Senate report says "it is expected that the Council and Secretary
would carefully consider all such recommendations" from
negotiation panels, although they are not required to accept
Issues: An issue, for fisheries requiring Secretarial regulation
under section 304(e)(5), is that the nine-month schedule may not
fit with a formal negotiated rulemaking exercise.
d. Central registry system for limited access system permits.
Summary: This section requires the Secretary to establish a
central registry, by April 11, 1997, for all "limited access
system permits" established under Federal law. Limited access
system permits specifically include IFQs. The registry must
provide for the registration of title to, and security interests
in, these permits, and it must be accessible to the public.
Procedures must be developed to deal with changes of title
pursuant to involuntary transfers, judicial or nonjudicial
foreclosures, enforcement of judgments, and related matters.
The new central registry will be the exclusive means of
perfecting title to, and security interests in, limited access
system permits, with a special exception for Federal tax liens.
(The procedures for filing Federal tax liens on limited access
system permits are governed by the Internal Revenue Code at 26
U.S.C. 1 et seq.) "Security interests" include "security
interests, assignments, liens and other encumbrances of whatever
kind." Lien priority will be determined based on time of filing
with the registry, the first to file having the highest priority.
In the event that a permit subject to a Federal tax lien is being
sold, the Secretary must notify both the buyer and seller of the
Federal lien's existence. However, there is no such requirement
for notifying lenders registering security interests of existing
Federal tax liens.
This section also establishes a new fee requirement and creates a
special fund. The Secretary is required to collect a fee of no
more than 0.5 percent of the value of the permit upon either the
registration of title or the transfer of title to the permits.
The statute does not authorize collection of a fee upon the
registration of a security interest. The fees collected here are
to be deposited into a special fund for administering the
registry and for implementing the Magnuson-Stevens Act in the
fishery in which the fees are collected.
Although the registry must be "central," the statute allows the
option of administering it regionally. The statute also allows
the option of contracting out the administration of the registry.
The Secretary must implement this section through regulations
after consulting with the Councils and providing opportunity for
Legislative History: This provision originated in the Senate,
and was designed to facilitate the use of permits as collateral
for loans. As the Senate Committee on Commerce, Science, and
Transportation reported, "Many participants in limited access
system fisheries use permits as loan collateral to finance the
acquisition of the permit itself or to otherwise finance their
operations. While loans for vessels can be secured with a
preferred ship mortgage filed in a central registry administered
by the Coast Guard...currently there is no comparable mechanism
for limited access system permits...."
The Committee went on to describe the central purpose of the
registry as providing the "exclusive means of perfecting security
against third parties without notice. The registry system should
reduce the risk that security granted by a permit holder will be
encumbered by someone else, and reduce the transaction costs
associated with financing limited access system permits. The
registry system would be exclusive and administered centrally,
thereby eliminating the uncertainty presently facing lenders and
other secured parties as to the appropriate jurisdiction in which
to file. However, the Committee anticipates that the system
would be administered on a regional basis, within the region
where the particular fishery management plan has been developed,
to increase convenience and to eliminate the need to file in
multiple jurisdictions or regularly check filings."
The Committee also noted its intent that the Secretary rely on
other applicable law, including the Uniform Commercial Code, with
respect to matters not provided for by the new section in
creating the registry system.
Despite opposition from Congressmen Frank and Riggs, the
provision was incorporated into the final version of the bill
that the House ultimately accepted. The main source of
opposition to this provision seemed to be the additional fee
imposed on the permit holders and confusion as to whether
participation in the registry would be mandatory. During floor
debate, Congressmen Frank and Riggs characterized the provision
as a new, involuntary tax on fishermen. However, earlier on the
same day, Congressman Young had inserted into the record his own
"clarifications" of what the provisions require. According to
him, "[w]hile establishment of the lien registry system by the
Secretary is mandatory, participation in the system by the
limited access permit holders is not. It is the intent of the
Congress that any permit holder registering a permit with the
system comply with the requirements of this subsection, including
paying any applicable fees. However, it is not the intent of the
Congress that all permit holders register with the system; this
is a discretionary action that each permit holder must decide to
take after weighing the costs and benefits of participating in
There was also some confusion as to what value would be
attributed to the permits. Congressman Frank stated that this
was left ambiguous. In reference to the fees established here,
Senator Stevens mentioned that "[a]ny fees collected on the ex-vessel value of the fish harvested
under an IFQ system can be
spent only in the fishery in which they were collected."
With regard to the requirement that the Secretary notify the
buyer and seller of a permit when the Secretary of the Treasury
has filed a Federal tax lien on the permit, Senator Stevens
interprets the act to require the Secretary to make the
determination of whether the Secretary of the Treasury has filed
any. Senator Stevens also clarified the intent of Congress that,
consistent with the requirements of the Internal Revenue Code of
1986, the Secretary of the Treasury may withdraw a notice of a
lien filed against a permit if the withdrawal will facilitate the
collection of a tax liability by allowing the owner of the permit
to derive income from the use of the permit.
Issues: NMFS is planning to publish a more detailed explanation
of its interpretation of this section in an advance notice of
proposed rulemaking, to be published in March 1997. Here are
some of the major issues:
1. Federal tax liens: How does the Secretary find out when the
IRS has filed a lien on a permit that is being sold? The SFA
requires the Secretary to notify the buyer and seller of a permit
if a Federal tax lien has been filed against the permit.
However, the IRS is under no obligation to notify the Secretary
when it files such a lien.
The SFA indicates that Federal tax liens on permits "shall be
perfected exclusively in accordance with the Internal Revenue
Code." Pursuant to the Internal Revenue Code, the IRS perfects
liens against personal property by filing in either a state
office or a U.S. District Court. 25 USC 6323(f). The IRS has no
duty to notify the Secretary when it files liens against limited
access permits. Thus, this statute has created an administrative
burden for NMFS to track IRS filings. NMFS will contact the IRS
and attempt to establish a cooperative procedure.
Apparently a previous version of the Manager's amendment to S. 39
would have required the IRS to perfect interests in limited
access permits using the same procedures as everyone else, but
this provision was taken out. Ironically, the IRS will continue
to face the jurisdictional challenges to perfecting its interests
that led the banking industry to push for a central registry. If
Congress amends the Act again to tie up loose ends, this might be
a good issue to address.
2. Scope: Which permits are included? The Act does not define
"limited access permits" other than to say that they include all
IFQs, and limited access permits established under the Magnuson
Act or other Federal law. A literal reading of this language
might extend the scope of the registry to include permits for
activities unrelated to fishing. However, NMFS will interpret
this provision to include only those "limited access system
permits" that pertain to fisheries. Also, while there are some
limited access fisheries administered by States (e.g., Alaska
salmon), this registry will only include permits for Federal
limited access systems.
Another scope question was whether NMFS has the leeway to include
only transferable permits in the registry. The statute is
ambiguous in this regard. NMFS has determined that approximately
40 percent of all limited access system permits have no market
value because they cannot be independently bought or sold. Thus,
including them in the registry would create an administrative
burden with no clear benefits. NMFS will propose in the ANPR to
exclude non-marketable permits from the registry.
3. Where should the registry be located? The Senate Committee
anticipated "that the system would be administered on a regional
basis, within the region where the particular fishery management
plan has been developed, to increase convenience and to eliminate
the need to file in multiple jurisdictions or regularly check
filings." However, the statute gives NMFS the option of
implementing the program centrally or regionally.
NMFS considered establishing a separate registry for each fishery
that implements a limited access system. However, this approach
seems unduly burdensome and would duplicate effort. NMFS also
considered creating a single central registry with local filing
centers in each region. This would create the possibility that
two people could fax in lien notices to two different offices at
the exact same time, making it impossible to determine priority.
NMFS will propose to implement one, central registry and to
locate it in the Alaska region. Ninety percent of the limited
access permits are located in the Alaska region. In addition,
that region already operates an unofficial registry and has a
significant amount of relevant data already on file.
4. Would participation in the registry be mandatory or
voluntary? Legislators disagreed over whether participation in
the registry should be mandatory or voluntary. The text of the
statute does not answer this question. A permit holder seeking a
loan would presumably agree to register voluntarily, but other
permit holders have no incentive (in fact have a disincentive) to
register their permits and pay the fee. Without mandatory
registration, it would be difficult for hostile lienors to
register their interests against unregistered permits. On the
other hand, it is likely that many permit holders will never use
the lien registry system, and it seems unfair to force them to
subsidize the system.
NMFS will propose two alternative approaches and solicit comments
in the ANPR. One approach would be to establish a system in
which registration is mandatory. NMFS would enter the title
information for all limited access permits into the registry, and
automatically bill every permit holder. The other approach would
call for voluntary registration only, unless/until a third party
sought to file a lien against an unregistered permit. In this
event, NMFS would enter the data for the unregistered permit into
the registry and bill the permit holder. Under either scenario,
everybody who registers under the new system would have to pay
the registration fee, regardless of their current listing in the
Alaska region's existing unofficial registry.
5. Should NMFS administer the registry in-house or contract out
this duty? The statute gives NMFS the option of contracting out
the administration of the registry. This issue sparked debate
within NMFS. Some people advocated contracting out, since the
registry will involve a whole new regulatory area with which NOAA
has little experience. Others, however, felt that, because the
registry is intended to be permanent and will deal with sensitive
financial issues, its maintenance is an inherently governmental
As discussed above, NMFS will propose operating the program in-house out of the Alaska
region. An attorney from the Commerce
Department's Office of Financial Litigation has provided
assistance in developing the ANPR and will continue to provide
guidance on registry issues.
6. How should fees be assessed? What is the value of a permit?
The statute requires the collection of fees, which are not to
exceed "one-half of one percent of the value of the permit," upon
registration of title, and upon transfer of title. What is the
market value of the permit? Is it related to the ex-vessel value
of the fish that can be harvested under the permit? If so, how
do you calculate the value before the specifications are set and
the fish sold? If funds are gathered regionally and deposited
centrally, there may be a co-mingling of funds problem.
NMFS has not resolved all of these issues. However, NMFS does
have data on permit transfers that could help establish market
value. Approximately 2,300 permits are transferred each year.
It would be possible to calculate the average price of the
permits based on this data, then to develop a value schedule on
which to base the registration fee. Transfer fees could be based
on the purchase price, except in the event of gifts,
inheritances, trades, etc. NMFS is soliciting comments on how
best to establish value.
7. What kind of encumbrances are included? Although this system
was intended to facilitate intentional encumbrances (i.e., loans
on permits), since the statute makes this registry the exclusive
means of perfecting an interest in a limited access permit, the
registry will also include involuntary encumbrances, such as
judicial and statutory liens.
8. How will the registry deal with involuntary transfers of
title, including nonjudicial foreclosure? NMFS is proposing
procedures for nonjudicial foreclosure similar to those set out
in the UCC. NMFS will recognize transfers of title effected
through nonjudicial foreclosure under either of two
circumstances: (a) if all secured parties junior to the secured
party seeking the nonjudicial foreclosure consent in writing; or
(b) the party seeking the nonjudicial foreclosures complies with
strict notification procedures, and no party holding a junior
security interest objects. NMFS would continue to enforce
limitations on qualifications for permit ownership.
9. Should standards be developed to determine the validity of a
"filing"? NMFS proposes to develop a standardized form to be
filed with other specified materials upon the filing of liens.
However, NMFS will not be responsible for assuring that the
documents filed are complete and correct. Disputes regarding
these issues will be left for resolution in other forums, such as
10. If a secured permit is revoked (e.g., for fraud), is the
lender still protected? Will the registry protect the interests
of fishermen as well as lenders? The registry will not be
responsible for protecting interests of any sort. It is solely a
source of information about liens that have been filed, and their
11. As to the priority of liens, does the "first in time, first
in line" provision depart from traditional UCC law? Is there a
danger that someone may lose priority because of this new law?
The "first in time" provision appears to be consistent with
existing practice under the UCC. Additional issues arising under
this section are discussed below in section 110(e), the
transitional period provision.
12. How are we going to meet the statutory deadline? Work is
underway to get the registry up and running. NMFS plans to
publish an ANPR in March 1997. However, due to the complexity of
the issues involved, and the need to obtain public comments on so
many issues, it will be difficult for NMFS to issue a final
regulation establishing the registry by April 11, 1997.
13. Additional questions: Does the Secretary have an interest
in encouraging the transfer of title, since he will collect a fee
for each transfer? How does this relate to the Secretary's role
as neutral registrar?
What is NMFS's potential liability if an administrative mistake
costs a lender his place in line? Can NMFS protect itself
against this liability? What has the Coast Guard done to protect
itself (in administering the vessel lien registry)?
e. Registry transition. [no MSFCMA amendment]
Summary: Section 110(e) provides for a transitional period.
Parties with security interests that are "effective and perfected
under other applicable law on the date of the final regulations"
implementing the registry will have 120 days from the date of
publication to submit evidence of the perfection of such security
and become registered in the central registry maintaining their
Issues: Is there any "other applicable law" other than the UCC
under which a party could have previously perfected a security
interest? Currently, the Alaska region is operating an
unofficial registry that parties may use to track and register
security interests in permits. Because this unofficial registry
is not authorized by any other applicable law, parties will not
maintain any priority based on participation in that registry.
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